NYT: This is your brain on NASDAQ

“Dopamine Futures” original art by Swivelchair

(all rights, if any totally waived, copy it all you want).

If you compare a screen shot of on-line gambling with a screen shot of on-line stock trading, they look very similar. That is probably because humans are hard wired for rewards — if you hunt and are successful, that is self-reinforcing behavior. Neurologically speaking, it probably has to do with that reward chemical, dopamine — a dopamine rush makes you feel good. The same thing happens when you play video games. Or have a crush on someone. Or want food, drugs, alcohol or gamble. Some people are more dopamine-intensive than others — because their dopamine machinery is a bit resistant, so they need to produce extra dopamine for the same effect. You sometimes see these people jumping off the empire state building.

Much practical analysis is being done in this area — here’s a video interview of Jason Zweig, a financial commentator and analyst, who wrote an entire book on the subject. I haven’t read the book but he is really interesting in the interview.

So, is there a “dopamine theory” of Société Générale? Yesterday’s NYT has an article where the parallels of stock trading — rapid on line buying and selling — with getting a rush from drugs. Or sex. Or video games.

Perhaps that’s what happened to Jérôme Kerviel, the “rogue” trader who apparently lost $7B+ on behalf of an investment bank in France.

NYT Business / World Business

Craving the High That Risky Trading Can Bring

By JENNY ANDERSON

Published: February 7, 2008

It is easy to dismiss Jérôme Kerviel, the rogue trader at Société Générale, as a fluke. So here is a sobering thought for Wall Street: There may be a bit of Mr. Kerviel in all of us.

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