- with Senior Company Executives, HR and Finance and Tax Executives
- in Canada
- with readers working within the Accounting & Consultancy, Insurance and Healthcare industries
Last month, the Ontario Securities Commission (OSC) published an additional behavioural science research report on gamification, entitled "Gamification and Retail Investing: Positive Use Cases and Mitigation Techniques." Unlike prior research reports, this one focused on use cases where gamification techniques could have a positive outcome on investor decision making, as well as available techniques to help mitigate any negative influences on retail investor behaviours. In this context, gamification refers to the use of game-like elements (e.g., points, rewards, leaderboards) to influence user behaviour.
Like other studies, to conduct this research the OSC and the Behavioural Insights Team held an online simulated trading experiment involving more than 4,000 Canadians, each of whom invested a hypothetical $10,000 across eight stocks. Participants were subjected to different gamification techniques, with the aim of trying to increase the diversification of their portfolios. These techniques included:
- A diversification score, based on diversification level;
- Goal framing, which set diversification goals and tracked progress;
- Leaderboards, which compared diversification scores to other participants; and
- Rewards, which provided badges when diversification thresholds were met.
The research found that all the above techniques had a positive (albeit modest) impact, resulting in a 3.5-4.5 per cent increase in portfolio diversification.
The research also included a literature/environmental scan to look at both positive applications of gamification and to identify strategies to mitigate negative effects, some of which have been explored in the OSC's prior research reports. Techniques such as educational interventions, enhanced disclosure, and friction-based interventions such as requiring a confirmation step before a high-risk trade, were found to potentially be helpful to investors in making more deliberate decisions, although additional research is recommended.
As a result, the report concluded that regulatory activities should not preclude positive use cases for gamification, and that additional research should be conducted on mitigation practices and positive use cases. A suggestion was also made to apply gamification techniques for investor education.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
