Monday, August 24, 2009

Risk taking and the menstrual cycle

We tend take preferences as given and constant, but there is mounting evidence that preferences change over the life cycle and over external circumstances, as I reported before. There may now even evidence that preferences that preferences follow a predictable cycle, at least for women.

Matthew Pearson and Burkhard Schipper asked an unusual question to the female participants in an otherwise standard auction experiment: what stage of your menstrual cycle are you in? It turns out the answer can explain bidding behavior: while otherwise indistinguishable from men, women in their menstrual and premenstrual phase bid significantly higher, thus exhibiting more risk taking. Pearson and Schipper argue this can be explained by biology and evolution. This is when women are most likely to be fertile and take risks to increase the probability to procreate.

The experiment is not entirely clean, it would be preferable to have the same women participate repeatedly during a menstrual cycle, but even this indirect evidence is intriguing. And it should tell women to take their cycle into consideration when taking decisions.

1 comment:

Burkhard C. Schipper said...

Here are some comments:

1. Bidding higher in first price auctions is consistent with more risk aversion, not more risk taking like mentioned in the posting. When bidding higher you increase the probability of winning the object but sacrifice some of your profit conditional on winning. Since women bid relatively lower during the fertile window, this is consistent with more risk taking during the fertile window.

2. In this auction, risk aversion and other explanations like anticipated looser regret, overconfidence etc. can not be behaviorally distinguished. So when the word "risk taking" is used, it should be understood more broadly than just risk. Experiments with other behavioral tasks like third price auctions or additional lotteries etc. may be required to investigate which disposition(s) exactly is (are) correlated with the menstrual cycle. Personally, I don't believe that it is (just) risk aversion.

3. The design of almost every experiment involves trade offs. Having women participate repeatedly along the cycle (i.e. a within-subject design) would induce learning effects across sessions. This may create issues like for example that may be you learn faster across the experimental sessions if you start the experiment in some phase of the cycle than in others.

4. The finding points to a connection between sex hormones and economic behavior. Currently we are planing a follow up study in which we will measure some of the sex hormones directly.

5. Finally, I should mention that our study is essentially a replication study of Chen, Katscuak and Ozdenoren (2005, 2009) who come to different conclusions. The relationship to that paper is discussed in our paper.

Thanks for your interest.