In November 2022, the Ontario Securities Commission (OSC) released a report outlining its findings on the effects on investor behaviour of “gamification” and other behavioural techniques employed by digital investment platforms.

Gamification and other behavioural techniques studied by the OSC included:

• “Gamblification”, including the use of variable rewards such as stock given to users who sign up for a new account or who refer a friend to the platform;
• Leaderboards that publicly display a ranking of users based on performance;
• Rewards for performing tasks or completing goals;
• Goal and progress framing that help users set goals and assess their progress;
• Feedback, such as diversification scores;
• Simplification and selective deployment of friction costs that encourage users to linger or not linger in certain parts of the platform, with possible consequences for their decisions about investing; and
• Social interaction possibilities among platform users.

While these and other behavioural techniques have the potential to be used positively – e.g. to encourage investor education or improve diversification of an investor’s portfolio – the OSC observed that they could also promote habit-forming behaviour and increased risk-taking by investors.

In order to study the effects of the various behavioural techniques, the OSC also conducted a randomized controlled trial of over 2,400 investors in a simulated trading environment. The results of the trial indicated that participants who were rewarded with points made almost 40% more trades than those in a control group, despite the points being of negligible value. Furthermore, participants who saw a list of the most highly-traded stocks were 14% more likely to trade those stocks.

In light of these findings, the report recommends that regulators consider whether the gamification and behavioural techniques result in behaviour that is detrimental to investor outcomes and, if so, the potential responses to such techniques.

For more information, see OSC Staff Notice 11-796 Digital Engagement Practices in Retail Investing: Gamification and Other Behavioural Techniques.