Trading gamification and investor behavior

69 Pages Posted: 28 Nov 2021 Last revised: 24 May 2023

See all articles by Philipp Chapkovski

Philipp Chapkovski

Institute for Applied Microeconomics

Mariana Khapko

University of Toronto - Finance Area; Swedish House of Finance

Marius Zoican

University of Toronto at Mississauga - Department of Management; University of Toronto - Rotman School of Management

Date Written: May 23, 2023

Abstract

We study the effect of gamification on retail traders' behavior using a randomized online experiment. Participants with lower financial literacy prefer platforms with hedonic gamification elements, such as confetti and achievement badges. On average, hedonic gamification increases trading volume by 5.17%. However, the difference in trading activity between gamified and non-gamified platforms is driven primarily by self-selection (70%) rather than gamification (30%). Participants who prefer hedonic gamification exhibit noisy trading strategies, while those favoring non-gamified platforms display stronger contrarian behavior. Further, price trend notifications enhance learning for investors with accurate beliefs, but reinforce trading mistakes for those with incorrect beliefs.

Keywords: gamification, risk, experimental finance, financial literacy, retail trading

JEL Classification: C91, G11, G41, G53

Suggested Citation

Chapkovski, Philipp and Khapko, Mariana and Zoican, Marius, Trading gamification and investor behavior (May 23, 2023). Swedish House of Finance Research Paper No. 21-25, Available at SSRN: https://ssrn.com/abstract=3971868 or http://dx.doi.org/10.2139/ssrn.3971868

Philipp Chapkovski

Institute for Applied Microeconomics ( email )

Bonn
Germany
+4915123570022 (Phone)

HOME PAGE: http://chapkovski.github.io

Mariana Khapko

University of Toronto - Finance Area ( email )

Toronto, Ontario M5S 3E6
Canada

Swedish House of Finance ( email )

Drottninggatan 98
Stockholm
Sweden

Marius Zoican (Contact Author)

University of Toronto at Mississauga - Department of Management ( email )


Canada

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.mariuszoican.com

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