With the Wimbledon Grand Slam tournament under way, many British bankers are watching tennis balls this week. But as the matches unfold, financiers have an added reason to ponder the game. John Coates, a former trader-turned-neuroscientist, has conducted research that suggests tennis can illuminate the world of finance. And while his theory is offbeat, the ideas deserve wider scrutiny as they offer important perspectives on how to control risk. The issue at stake revolves around the so-called winner effect, also known as the "hot hands" phenomenon in American sports. Biologists who study the animal kingdom know that, when mammals defeat rivals in a contest, they often continue to win in subsequent contests. Relative strength explains some of this, but winning also seems to change the physiology of animals: in some species "winners" emit a specific odour that scares rivals, or they receive a hormonal boost that gives them an advantage. Nobody has ever proved that humans share this tr...

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