The Lehman Sisters Hypothesis

This article explores the Lehman Sisters Hypothesis. It reviews empirical literature about gender differences in behavioral, experimental, and neuro-economics as well as in other fields of behavioral research. It discusses gender differences along three dimensions of financial behavior: risk aversion and response to uncertainty, ethics and moral attitude, and leadership. The article argues that gender stereotypes are influential in finance, constraining women to achieve top positions in banking and sustaining a strong masculine culture. At the same time, the analysis indicates that the few women who make it to the top tend to perform on average better than men, in particular under uncertainty. This is explained by a combination of gender beliefs, gender stereotypes, gender identity, and flexible biological processes. Although further research is necessary, the existing empirical literature would support a plea for having more rather than less women in financial trade, risk management, and at the top of the financial sector.