Gamified risk-taking

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 highvolatility 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