War and terrorism, anthrax and SARS, the stock market and the job market — if any of those things have really shaken you up, that's your amygdala talking to you.

The amygdala (pronounced ah-MIG-da-la) is a region of the brain that, as one researcher put it, tells you if new sights and sounds are "relevant" to you — whether you need to respond quickly to them. The amygdala can generate powerful emotions — the so-called fight-or-flight response.

Another region of the brain, the prefrontal cortex, is the center of reflection, the section the brain uses to make reasoned responses. Still other regions help one recall an experience, or calculate its importance.

The problem is that when one needs to react quickly to something traumatic, the amygdala wins out. And that means, sometimes, that people worry about the wrong things.

"We all make poor decisions at times because we don't have enough information, or we react impulsively," says Jordan Grafman of the National Institute of Neurological Disorders and Stroke.

Knowing Your Risks

Grafman's research includes extensive work with a Vietnam veteran he calls Michael. Michael was a very levelheaded man, until a war injury damaged his prefrontal cortex.

After that, says Grafman, he became an uncontrolled risk-taker. He was impulsive. He married a prostitute, then an underage woman. Signals from his amygdala, Grafman theorizes, went unchecked. Only after extensive therapy has Michael been able to hold down a job.

Michael's experience is an extreme case, but Grafman says it shows us how the human brain is designed to react first and reason later.

"It's our natural tendency to look toward things that in essence turn us on, appeal to us or sometimes make us quite fearful," says Grafman. "But that very design often distorts the actual risk of the circumstance."

Behavioral scientists say because of the brain's structure, perfectly healthy people may overreact to upsetting circumstances. Many Americans went and bought duct tape — even though they knew, on an intellectual level, that their personal odds of dying in a terrorist attack were far smaller than the risk from auto accidents or heart disease.

From Main Street to Wall Street

At the Massachusetts Institute of Technology, economist Andrew Lo sees the same dynamic at work in financial markets.

"We're hoping this will suggest broader implications for how it is people think about risks in general," says Lo.

As part of their research, Lo and his assistants attached electrodes to Linda Sarkisian, a stock trader in Boston. They measured her heart rate, perspiration and brain waves as she maneuvered through the ups and downs of the market.

"Oh, your heart's beating like crazy now," said one of her colleagues as they executed trades. "You're making money!"

Lo says his research is only in its early stages, but he says that if traders follow their instincts, they will quickly lose money. They will buy stocks when they look "good" — that is, when their prices are high — and sell in a panic after the market has gone down.

"Whereas the fight-or-flight response will help you save your life in certain situations," Lo says, "in the financial context it will not help you save your wealth."

And that leads, perhaps, to a larger theme: that the decisions we all have to make on impulse are often the wrong ones. Doctors say that after a traumatic experience, the best response is often to do nothing — to wait, calm down, and learn more.

"Less knowledge, more anxiety," says Grafman. "More knowledge, less anxiety."