Brain has many different parts which are responsible for various functions in our body. It is the brain that lets you experience pain and pleasure. Some of the very interesting researches have led to even more interesting results. This one is about the part that makes you happy or feel good.
There is a chemical present in the brain called Dopamine. As soon as Dopamine is released people start getting excited and feel very good. They feel so good that they want more and more of the same thing that caused its release. So we can call it an addictive pleasure chemical. When a person acquires sudden wealth, there is a release of high amount of Dopamine in the brain which makes him feel very happy about it. It has been proved that financial gain is directly correlated with the release of dopamine in the brain. The fact that this chemical is addictive has been proven with rats in a lab. In this experiment if they pressed a lever, a pulse stimulated their Dopamine center and released Dopamine. With this happiness, the rats learnt so fast to press the lever to release Dopamine that they left drinking, eating etc. and became interested only in that lever.
Now is the most interesting part – research has been carried out with people given a sense of financial gain and COCAINE addicts. MRI scans of the part of the brain revealed that there is no difference between the cocaine addict and the person who has just acquired wealth. The scans actually failed to distinguish between the two people.
Now Apart from the release of dopamine, it is also true that if a person receives a $100 note or if he receives 10 notes $10, the release of Dopamine in higher in the second case. This is what is responsible for the irrational behaviour of traders. When the price of a stock we are holding goes up, we feel elated because we feel we have become rich without even selling that stock. Even if we know that now is the time to sell it, we don’t, because the Dopamine is an addictive chemical as explained, and we want more and more of it.