Does Gamified Trading Stimulate Risk Taking?

45 Pages Posted: 28 Nov 2021 Last revised: 2 Dec 2021

See all articles by Philipp Chapkovski

Philipp Chapkovski

WZB

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: November 25, 2021

Abstract

We run a randomized online experiment to study the impact of trading platform gamification on retail traders' risk taking. We recruit 605 participants from four countries, two-thirds of them reporting self-directed trading experience, to trade a virtual asset on an experimental platform. The gamified version of the platform features elements such as achievement badges or encouragement messages. We find that gamification "nudges" participants to take on more risk, particularly when trading high-volatility assets. The effect is stronger for inexperienced traders with lower financial literacy. A one standard deviation increase in the financial literacy score reduces the impact of gamification by 56%.

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, Does Gamified Trading Stimulate Risk Taking? (November 25, 2021). 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

WZB ( email )

Reichpietschufer 50
Berlin, 10785
Germany

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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