The Ontario Securities Commission has published research showing that gamification techniques, often blamed for encouraging risky trading behaviour, can be designed to improve investor outcomes.
The regulator’s third behavioural science report, released on Tuesday, tested four game-like features in a simulated trading environment. All four produced a modest 3.5% to 4.5% increase in portfolio diversification among participants.
“Understanding the behavioural impact of gamification is critical to ensuring that digital engagement practices support, rather than undermine, investor outcomes,” said Kevin Fine, Senior Vice President of Thought Leadership at the OSC. “Gamification techniques can put investors at risk, but when used thoughtfully, they can encourage positive behaviours like portfolio diversification.”
The experiment
The OSC partnered with the Behavioural Insights Team to conduct an online experiment with over 4,000 Canadians. Participants were given a hypothetical $10,000 to invest across eight stocks on a simulated platform called “Stockland.”
Researchers tested four interventions:
- Diversification Score, a real-time rating out of 100 based on portfolio balance
- Goal Framing, which set diversification targets and tracked progress
- Leaderboards comparing users’ diversification scores
- Rewards in the form of bronze, silver and gold badges for hitting specific thresholds
The study found that the specific format of gamification mattered less than making diversification salient to users. Participants in treatment groups tended to choose more balanced portfolios, with the Diversification Score particularly effective for high-risk investors who started with concentrated holdings.
Regulatory implications
The findings differ from previous OSC research, which focused on the harms of gamification. A 2022 study found that giving investors points for trades increased trading frequency by 40%, while 2024 research linked social features and copy trading to herding behaviour.
The new report recommends that regulators ensure any rules targeting harmful gamification do not inadvertently ban features that help investors. It also calls for ongoing testing as platforms evolve and suggests incorporating gamified elements into investor education programs.
