Mara Mather, a cognitive neuroscientist at the University of Southern California, and Nichole R. Lighthall, a cognitive neuroscientist now at Duke University, are two of the many researchers who have found that under normal circumstances, when everything is low-key and manageable, men and women make decisions about risk in similar ways. We gather the best information we can, we weigh potential costs against potential gains, and then we choose how to act. But add stress to the situation — replicated in the lab by having participants submerge their hands in painfully cold, 35-degree water — and men and women begin to part ways.What the researchers failed to note is that this actually explains why there are so few female entrepreneurs and why it is much more often men who become very wealthy. The higher the risk, the more likely you are to lose everything, but the higher the potential reward. It's not an accident that many of the most wealthy men have gained, lost, and recovered, large fortunes. Unless your plan is to inherit wealth, accepting high levels of risk is the only way to become very wealthy.
Dr. Mather and her team taught people a simple computer gambling game, in which they got points for inflating digital balloons. The more they inflated each balloon, the greater its value, and the risk of popping it. When they were relaxed, men and women took similar risks and averaged a similar number of pumps. But after experiencing the cold water, the stressed women stopped sooner, cashing out their winnings and going with the more guaranteed win. Stressed men did just the opposite. They kept pumping — in one study averaging about 50 percent more pumps than the women — and risking more. In this experiment, the men’s risk-taking earned them more points. But that wasn’t always the case.
In another experiment, researchers asked participants to draw cards from multiple decks, some of which were safe, providing frequent small rewards, and others risky, with infrequent but bigger rewards. They found that the most stressed men drew 21 percent more cards from the risky decks than from the safe ones, compared to the most stressed women, losing more over all.
Across a variety of gambles, the findings were the same: Men took more risks when they were stressed. They became more focused on big wins, even when they were costly and less likely.
Levels of the stress hormone cortisol appear to be a major factor, according to Ruud van den Bos, a neurobiologist at Radboud University in the Netherlands. He and his colleagues have found that the tendency to take more risks when under pressure is stronger in men who experience a larger spike in cortisol. But in women he found that a slight increase in cortisol seemed actually to improve decision-making performance.But the closer the women got to the stressful event, the better their decision making became. Stressed women tended to make more advantageous decisions, looking for smaller, surer successes. Not so for the stressed men. The closer the timer got to zero, the more questionable the men’s decision making became, risking a lot for the slim chance of a big achievement.
So, what this means is that we could probably use more women in finance and fewer women in technology. We want people chasing risk in startups. We don't want them chasing it in banks.