Why did Tony Stark use Palladium in his arc reactor?

That's an interesting question. Because in the comics there's little mention of it. But in the MCU it made a whole movie. Palladium is not radioactive. It's technically not poisonous, as shown in the movie. read more

Maybe because Tony Stark’s arc reactor is a nuclear fusion reactor(just like sun but extremely small) .And you need hydrogen as fuel to run a nuclear fusion reactor. Palladium is an excellent hydrogen absorber. read more

The Arc Reactor was a power core made out of palladium, and was the initial power source of the first Iron Man Mark suits, and was later modified to an advanced level by Tony to power his suits, as it kept on improving. read more

To solve this problem, Tony Stark builds himself an miniaturized Arc Reactor (a small but highly durable power source) to run his electromagnet. He then inserts that Arc Reactor in a cavity on his chest. read more