New research supports the theory that testosterone influences the decision making of stock market traders, and could be a cause of market instability.

An international team of researchers recruited 140 young males to participate in experimental asset market simulation. Prior to the simulated trading period, the participants were given a topical gel containing testosterone or a placebo.

During the simulation, researchers had the young men post bids and request offer prices, as well as buy and sell assets. Though the assets they were trading were fake, their performance was rewarded with real money.

The experiment's results -- shared this week in the journal Management Science -- revealed more inflated price bubbles among markets inhabited by traders hopped up on testosterone.

Traders who received a placebo gel were more likely to employ a traditional stock market strategy: buy low, sell high. High-testosterone traders were more likely to deploy a more aggressive strategy: buy high to sell higher.

"This research suggests the need to consider hormonal influences on decision-making in professional settings, because biological factors can exacerbate capital risk," Amos Nadler, a researcher at the Ivey Business School at Western University, said in a news release. "Perhaps the simplest recommendation is to implement 'cool down' periods to interrupt exceptionally positive feedback cycles and return the focus to assets' fundamental valuations to reduce the possibility of biased decision-making."

Previous studies have suggested a greater number of women on trading floors could help ensure stock markets behave more rationally. Similarly, Nadler and his colleagues suggest trading firms may want to limit the risk taken by young male traders.

"This is the first study to have shown that testosterone changes the way the brain calculates value and returns in the stock market and therefore -- testosterone's neurologic influence will cause traders to make suboptimal decisions unless systems prevent them from occurring," said Nadler.

Despite Nadler's claim, the idea that testosterone and other hormones can influence the decision making of stock traders isn't new.

One previous study suggested testosterone increases the feeling that a person's good fortune is likely to continue, while another study determined both cortisol and testosterone triggered risk-taking and price instability among traders in an asset market simulation.

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