Tocqueville saw that the life of constant action and decision which was entailed by the democratic and businesslike character of American life put a premium upon rough and ready habits of mind, quick decision, and the prompt seizure of opportunities-and that all this activity was not propitious for deliberation, elaboration, or precision in thought.

-RICHARD HOFSTADTER, IN Anti-Intellectualism in America

Just after 7:30 a.m. on December 11, 2008, the year of the great stock market crash, Dr. Janice Dorn's phone rang. The markets had opened on the East Coast to another session of carnage. Housing prices were plummeting, credit markets were frozen, and GM teetered on the brink of bankruptcy.

Dorn took the call from her bedroom, as she often does, wearing a headset and perched atop her green duvet. The room was decorated sparely. The most colorful thing in it was Dorn herself, who, with her flowing red hair, ivory skin, and trim frame, looks like a mature version of Lady G.o.diva. Dorn has a PhD in neuroscience, with a specialty in brain anatomy. She's also an MD trained in psychiatry, an active trader in the gold futures market, and a "financial psychiatrist" who has counseled an estimated six hundred traders.

"Hi, Janice!" said the caller that morning, a confident-sounding man named Alan. "Do you have time to talk?"

Dr. Dorn did not have time. A day trader who prides herself on being in and out of trading positions every half hour, she was eager to start trading. But Dorn heard a desperate note in Alan's voice. She agreed to take the call.

Alan was a sixty-year-old midwesterner who struck Dorn as a salt-of-the-earth type, hardworking and loyal. He had the jovial and a.s.sertive manner of an extrovert, and he maintained his good cheer despite the story of disaster he proceeded to tell. Alan and his wife had worked all their lives, and managed to sock away a million dollars for retirement. But four months earlier he'd gotten the idea that, despite having no experience in the markets, he should buy a hundred thousand dollars' worth of GM stock, based on reports that the U.S. government might bail out the auto industry. He was convinced it was a no-lose investment.

After his trade went through, the media reported that the bailout might not happen after all. The market sold off GM and the stock price fell. But Alan imagined the thrill of winning big. It felt so real he could taste it. He held firm. The stock fell again, and again, and kept dropping until finally Alan decided to sell, at a big loss.

There was worse to come. When the next news cycle suggested that the bailout would happen after all, Alan got excited all over again and invested another hundred thousand dollars, buying more stock at the lower price. But the same thing happened: the bailout started looking uncertain.

Alan "reasoned" (this word is in quotation marks because, according to Dorn, conscious reasoning had little to do with Alan's behavior) that the price couldn't go much lower. He held on, savoring the idea of how much fun he and his wife would have spending all the money he stood to make. Again the stock went lower. When finally it hit seven dollars per share, Alan sold. And bought yet again, in a flush of exhilaration, when he heard that the bailout might happen after all ...

By the time GM's stock price fell to two dollars a share, Alan had lost seven hundred thousand dollars, or 70 percent of his family nest egg.

He was devastated. He asked Dorn if she could help recoup his losses. She could not. "It's gone," she told him. "You are never going to make that money back."

He asked what he'd done wrong.

Dorn had many ideas about that. As an amateur, Alan shouldn't have been trading in the first place. And he'd risked far too much money; he should have limited his exposure to 5 percent of his net worth, or $50,000. But the biggest problem may have been beyond Alan's control: Dorn believed he was experiencing an excess of something psychologists call reward sensitivity.

A reward-sensitive person is highly motivated to seek rewards-from a promotion to a lottery jackpot to an enjoyable evening out with friends. Reward sensitivity motivates us to pursue goals like s.e.x and money, social status and influence. It prompts us to climb ladders and reach for faraway branches in order to gather life's choicest fruits.

But sometimes we're too sensitive to rewards. Reward sensitivity on overdrive gets people into all kinds of trouble. We can get so excited by the prospect of juicy prizes, like winning big in the stock market, that we take outsized risks and ignore obvious warning signals.

Alan was presented with plenty of these signals, but was so animated by the prospect of winning big that he couldn't see them. Indeed, he fell into a cla.s.sic pattern of reward sensitivity run amok: at exactly the moments when the warning signs suggested slowing down, he sped up-dumping money he couldn't afford to lose into a speculative series of trades.

Financial history is full of examples of players accelerating when they should be braking. Behavioral economists have long observed that executives buying companies can get so excited about beating out their compet.i.tors that they ignore signs that they're overpaying. This happens so frequently that it has a name: "deal fever," followed by "the winner's curse." The AOLTime Warner merger, which wiped out $200 billion of Time Warner shareholder value, is a cla.s.sic example. There were plenty of warnings that AOL's stock, which was the currency for the merger, was wildly overvalued, yet Time Warner's directors approved the deal unanimously.

"I did it with as much or more excitement and enthusiasm as I did when I first made love some forty-two years ago," exclaimed Ted Turner, one of those directors and the largest individual shareholder in the company. "TED TURNER: IT'S BETTER THAN s.e.x," announced the New York Post the day after the deal was struck, a headline to which we'll return for its power to explain why smart people can sometimes be too reward-sensitive.

You may be wondering what all this has to do with introversion and extroversion. Don't we all get a little carried away sometimes?

The answer is yes, except that some of us do so more than others. Dorn has observed that her extroverted clients are more likely to be highly reward-sensitive, while the introverts are more likely to pay attention to warning signals. They're more successful at regulating their feelings of desire or excitement. They protect themselves better from the downside. "My introvert traders are much more able to say, 'OK, Janice, I do feel these excited emotions coming up in me, but I understand that I can't act on them.' The introverts are much better at making a plan, staying with a plan, being very disciplined."

To understand why introverts and extroverts might react differently to the prospect of rewards, says Dorn, you have to know a little about brain structure. As we saw in chapter 4, our limbic system, which we share with the most primitive mammals and which Dorn calls the "old brain," is emotional and instinctive. It comprises various structures, including the amygdala, and it's highly interconnected with the nucleus acc.u.mbens, sometimes called the brain's "pleasure center." We examined the anxious side of the old brain when we explored the role of the amygdala in high reactivity and introversion. Now we're about to see its greedy side.

The old brain, according to Dorn, is constantly telling us, "Yes, yes, yes! Eat more, drink more, have more s.e.x, take lots of risk, go for all the gusto you can get, and above all, do not think!" The reward-seeking, pleasure-loving part of the old brain is what Dorn believes spurred Alan to treat his life savings like chips at the casino.

We also have a "new brain" called the neocortex, which evolved many thousands of years after the limbic system. The new brain is responsible for thinking, planning, language, and decision-making-some of the very faculties that make us human. Although the new brain also plays a significant role in our emotional lives, it's the seat of rationality. Its job, according to Dorn, includes saying, "No, no, no! Don't do that, because it's dangerous, makes no sense, and is not in your best interests, or those of your family, or of society."

So where was Alan's neocortex when he was chasing stock market gains?

The old brain and the new brain do work together, but not always efficiently. Sometimes they're actually in conflict, and then our decisions are a function of which one is sending out stronger signals. So when Alan's old brain sent its breathless messages up to his new brain, it probably responded as a neocortex should: it told his old brain to slow down. It said, Watch out! But it lost the ensuing tug-of-war.

We all have old brains, of course. But just as the amygdala of a high-reactive person is more sensitive than average to novelty, so do extroverts seem to be more susceptible than introverts to the reward-seeking cravings of the old brain. In fact, some scientists are starting to explore the idea that reward-sensitivity is not only an interesting feature of extroversion; it is what makes an extrovert an extrovert. Extroverts, in other words, are characterized by their tendency to seek rewards, from top dog status to s.e.xual highs to cold cash. They've been found to have greater economic, political, and hedonistic ambitions than introverts; even their sociability is a function of reward-sensitivity, according to this view-extroverts socialize because human connection is inherently gratifying.

What underlies all this reward-seeking? The key seems to be positive emotion. Extroverts tend to experience more pleasure and excitement than introverts do-emotions that are activated, explains the psychologist Daniel Nettle in his illuminating book on personality, "in response to the pursuit or capture of some resource that is valued. Excitement builds towards the antic.i.p.ated capture of that resource. Joy follows its capture." Extroverts, in other words, often find themselves in an emotional state we might call "buzz"-a rush of energized, enthusiastic feelings. This is a sensation we all know and like, but not necessarily to the same degree or with the same frequency: extroverts seem to get an extra buzz from the pursuit and attainment of their goals.

The basis of buzz appears to be a high degree of activity in a network of structures in the brain-often called the "reward system"-including the orbitofrontal cortex, the nucleus acc.u.mbens, and the amygdala. The job of the reward system is to get us excited about potential goodies; fMRI experiments have shown that the system is activated by any number of possible delights, from antic.i.p.ation of a squirt of Kool-Aid on the tongue, to money, to pictures of attractive people.

The neurons that transmit information in the reward network operate in part through a neurotransmitter-a chemical that carries information between brain cells-called dopamine. Dopamine is the "reward chemical" released in response to antic.i.p.ated pleasures. The more responsive your brain is to dopamine, or the higher the level of dopamine you have available to release, some scientists believe, the more likely you are to go after rewards like s.e.x, chocolate, money, and status. Stimulating mid-brain dopamine activity in mice gets them to run around excitedly in an empty cage until they drop dead of starvation. Cocaine and heroin, which stimulate dopamine-releasing neurons in humans, make people euphoric.

Extroverts' dopamine pathways appear to be more active than those of introverts. Although the exact relationship between extroversion, dopamine, and the brain's reward system has not been conclusively established, early findings have been intriguing. In one experiment, Richard Depue, a neurobiologist at Cornell University, gave an amphetamine that activates the dopamine system to a group of introverts and extroverts, and found that the extroverts had a stronger response. Another study found that extroverts who win gambling games have more activity in the reward-sensitive regions of their brains than victorious introverts do. Still other research has shown that the medial orbitofrontal cortex, a key component of the brain's dopamine-driven reward system, is larger in extroverts than in introverts.

By contrast, introverts "have a smaller response" in the reward system, writes psychologist Nettle, "and so go less out of their way to follow up [reward] cues." They will, "like anyone, be drawn from time to time to s.e.x, and parties, and status, but the kick they get will be relatively small, so they are not going to break a leg to get there." In short, introverts just don't buzz as easily.

In some ways, extroverts are lucky; buzz has a delightful champagne-bubble quality. It fires us up to work and play hard. It gives us the courage to take chances. Buzz also gets us to do things that would otherwise seem too difficult, like giving speeches. Imagine you work hard to prepare a talk on a subject you care about. You get your message across, and when you finish the audience rises to its feet, its clapping sustained and sincere. One person might leave the room feeling, "I'm glad I got my message across, but I'm also happy it's over; now I can get back to the rest of my life." Another person, more sensitive to buzz, might walk away feeling, "What a trip! Did you hear that applause? Did you see the expression on their faces when I made that life-changing point? This is great!"

But buzz also has considerable downsides. "Everyone a.s.sumes that it's good to accentuate positive emotions, but that isn't correct," the psychology professor Richard Howard told me, pointing to the example of soccer victories that end in violence and property damage. "A lot of antisocial and self-defeating behavior results from people who amplify positive emotions."

Another disadvantage of buzz may be its connection to risk-sometimes outsized risk. Buzz can cause us to ignore warning signs we should be heeding. When Ted Turner (who appears to be an extreme extrovert) compared the AOLTime Warner deal to his first s.e.xual experience, he may have been telling us that he was in the same buzzy state of mind as an adolescent who's so excited about spending the night with his new girlfriend that he's not thinking much about the consequences. This blindness to danger may explain why extroverts are more likely than introverts to be killed while driving, be hospitalized as a result of accident or injury, smoke, have risky s.e.x, partic.i.p.ate in high-risk sports, have affairs, and remarry. It also helps explain why extroverts are more p.r.o.ne than introverts to overconfidence-defined as greater confidence unmatched by greater ability. Buzz is JFK's Camelot, but it's also the Kennedy Curse.

This theory of extroversion is still young, and it is not absolute. We can't say that all extroverts constantly crave rewards or that all introverts always brake for trouble. Still, the theory suggests that we should rethink the roles that introverts and extroverts play in their own lives, and in organizations. It suggests that when it comes time to make group decisions, extroverts would do well to listen to introverts-especially when they see problems ahead.

In the wake of the 2008 crash, a financial catastrophe caused in part by uncalculated risk-taking and blindness to threat, it became fashionable to speculate whether we'd have been better off with more women and fewer men-or less testosterone-on Wall Street. But maybe we should also ask what might have happened with a few more introverts at the helm-and a lot less dopamine.

Several studies answer this question implicitly. Kellogg School of Management Professor Camelia Kuhnen has found that the variation of a dopamine-regulating gene (DRD4) a.s.sociated with a particularly thrill-seeking version of extroversion is a strong predictor of financial risk-taking. By contrast, people with a variant of a serotonin-regulating gene linked to introversion and sensitivity take 28 percent less financial risk than others. They have also been found to outperform their peers when playing gambling games calling for sophisticated decision-making. (When faced with a low probability of winning, people with this gene variant tend to be risk-averse; when they have a high probability of winning, they become relatively risk-seeking.) Another study, of sixty-four traders at an investment bank, found that the highest-performing traders tended to be emotionally stable introverts.

Introverts also seem to be better than extroverts at delaying gratification, a crucial life skill a.s.sociated with everything from higher SAT scores and income to lower body ma.s.s index. In one study, scientists gave partic.i.p.ants the choice of a small reward immediately (a gift certificate from Amazon) or a bigger gift certificate in two to four weeks. Objectively, the bigger reward in the near but not immediate future was the more desirable option. But many people went for the "I want it now" choice-and when they did, a brain scanner revealed that their reward network was activated. Those who held out for the larger reward two weeks hence showed more activity in the prefrontal cortex-the part of the new brain that talks us out of sending ill-considered e-mails and eating too much chocolate cake. (A similar study suggests that the former group tended to be extroverts and the latter group introverts.)

Back in the 1990s, when I was a junior a.s.sociate at a Wall Street law firm, I found myself on a team of lawyers representing a bank considering buying a portfolio of subprime mortgage loans made by other lenders. My job was to perform due diligence-to review the doc.u.mentation to see whether the loans had been made with the proper paperwork. Had the borrowers been notified of the interest rates they were slated to pay? That the rates would go up over time?

The papers turned out to be chock-full of irregularities. If I'd been in the bankers' shoes, this would have made me nervous, very nervous. But when our legal team summarized the risks in a caution-filled conference call, the bankers seemed utterly untroubled. They saw the potential profits of buying those loans at a discount, and they wanted to go ahead with the deal. Yet it was just this kind of risk-reward miscalculation that contributed to the failure of many banks during the Great Recession of 2008.

At about the same time I evaluated that portfolio of loans, I heard a story circulating on Wall Street about a compet.i.tion among investment banks for a prestigious piece of business. Each of the major banks sent a squad of their top employees to pitch the client. Each team deployed the usual tools: spread sheets, "pitch books," and PowerPoint presentations. But the winning team added its own piece of theatrics: they ran into the room wearing matching baseball caps and T-shirts emblazoned with the letters FUD, an acronym for Fear, Uncertainty, and Doubt. In this case FUD had been crossed out with an emphatic red X; FUD was an unholy trinity. That team, the vanquishers of FUD, won the contest.

Disdain for FUD-and for the type of person who tends to experience it-is what helped cause the crash, says Boykin Curry, a managing director of the investment firm Eagle Capital, who had front-row seats to the 2008 meltdown. Too much power was concentrated in the hands of aggressive risk-takers. "For twenty years, the DNA of nearly every financial inst.i.tution ... morphed dangerously," he told Newsweek magazine at the height of the crash. "Each time someone at the table pressed for more leverage and more risk, the next few years proved them 'right.' These people were emboldened, they were promoted and they gained control of ever more capital. Meanwhile, anyone in power who hesitated, who argued for caution, was proved 'wrong.' The cautious types were increasingly intimidated, pa.s.sed over for promotion. They lost their hold on capital. This happened every day in almost every financial inst.i.tution, over and over, until we ended up with a very specific kind of person running things."

Curry is a Harvard Business School grad and, with his wife, Celerie Kemble, a Palm Beachborn designer, a prominent fixture on New York political and social scenes. Which is to say that he would seem to be a card-carrying member of what he calls the "go-go aggressive" crowd, and an unlikely advocate for the importance of introverts. But one thing he's not shy about is his thesis that it was forceful extroverts who caused the global financial crash.

"People with certain personality types got control of capital and inst.i.tutions and power," Curry told me. "And people who are congenitally more cautious and introverted and statistical in their thinking became discredited and pushed aside."