From http://www.bloomberg.com/apps/news?pid=10000103&sid=amJen.RBuJgg&refer=us Brain Scans of Traders Show Link Between Lust for Sex and Money Feb. 1 (Bloomberg) -- Late at night, in a basement laboratory at Stanford University, Brian Knutson made a startling discovery: Our brains lust after money, just like they crave sex. It was May 2004, and Knutson, a professor of neuroscience and psychology at the California university, was sending student volunteers through a high-power imaging machine called an fMRI. Deep inside each subject's head, electrical currents danced through a bundle of neurons about the size and shape of a peanut. Blood was rushing to the brain's pleasure center as students executed mock stock and bond trades. On Knutson's screen, this region of the brain, the core of human desire, flashed canary yellow. The pleasure of orgasm, the high from cocaine, the rush of buying Google Inc. at $450 a share --- the same neural network governs all three, Knutson, 38, concluded. What's more, our primal pleasure circuits can, and often do, override our seat of reason, the brain's frontal cortex, the professor says. In other words, stocks, like sex, sometimes drive us crazy. Knutson says he knows how heretical his findings are. Wall Street is dedicated to the principle that when it comes to money, logic prevails, that intellect matters in investing. The idea is enshrined in the economic theory of rational expectations, for which Robert Lucas won the Nobel Memorial Prize in Economic Sciences in 1995. Lucas, a professor of economics at the University of Chicago, maintains that people make economic choices based on all the information available to them and learn from their mistakes. As a result, their expectations about the future --- from the price of Citigroup Inc. stock next week to the earnings of General Motors Corp. next quarter --- are, on average, accurate. Why Soros Wins Or so the theory goes. In practice, of course, investors do foolish things all the time. Some gamble away fortunes on money- losing investments, doubling down when logic tells them to fold, or letting winnings ride when the rational person would cash out. Others seem to have an uncanny knack for knowing when to buy and sell. In the 1970s, Richard Dennis parlayed an initial stake of several thousand dollars into a $200 million fortune trading commodities in the Chicago futures pits. In the 1980s, hedge fund icon Paul Tudor Jones made $80 million by betting against U.S. stocks just before the market crashed. In the 1990s, billionaire investor George Soros, the man who beat the Bank of England, made $1 billion in an afternoon by shorting the British pound. The question that keeps nagging Knutson is this: Why do some traders get rich while others walk away losers? The answer, he says, may lie somewhere in the 96,000 kilometers (60,000 miles) of neural wiring inside our brains. The results of the Stanford study, published in the September issue of Neuron magazine, have caused a stir among the small group of neuroscientists and psychologists who are mapping the human brain in hopes of understanding investor behavior.