We spoke with Marie-Hélène Broihanne about her research projects in partnership with the AMF, where she sits as a member of the scientific council.
- Can you briefly explain your research project in connection with the AMF (French financial markets regulator)?
In recent years, the financial industry has seen the emergence of digital influence strategies integrated into trading platforms and investment applications, such as gamification (the integration of game elements into non-game contexts, Deterding et al., 2011) and copy trading (the automatic imitation of investment decisions via platforms such as eToro or ZuluTrade). These tools aim to make investment more accessible and engaging for individuals, while influencing their decisions.
These tools can promote savings and financial literacy or encourage user engagement, but they can also exacerbate behavioral biases, promoting overconfidence or under-diversification. In addition, push notifications or attractive visual elements sometimes encourage risky behavior, such as excessive trading or undiversified investments.
In January 2023, I proposed to the AMF that we develop a laboratory experiment simulating a financial market in order to identify the causal effects of these tools on investment behavior, study their heterogeneity according to the socio-demographic profiles of investors, analyze the underlying behavioral mechanisms (social preferences, cognitive biases, etc.) and explore their potential to influence financial decisions in a beneficial or harmful way. This project was then developed in collaboration with colleagues from LaRGE (Nicolas Eber) and BETA (Kene Boun My, Research Engineer at the CNRS, and Jérôme Hergueux, Research Fellow at the CNRS and Scientific Director of LEES).
Reference:
Deterding S., Dixon D., Khaled R., Nacke L. (2011), From game design elements to gamefulness: Defining “gamification”, in Proceedings of the 15th International Academic MindTrek Conference: Envisioning Future Media Environments MindTrek '11 pp. 9–15 New York, NY, USA. Association for Computing Machinery.
- How do you share the scientific results of your research with the AMF and other bodies? By what means?
The results of the pilot experiment were presented and discussed at the meeting of the AMF's Scientific Council on June 21, 2023, on which I sit. Following this presentation, I was invited to present the results in October 2023 to the Retail Investors Consultative Commission with a view to obtaining approval for the publication of our work on the AMF website and a Cover note in November 2023:
(Gamification and copy trading in finance : An experiment (full version) | AMF).
These publications by the French regulator have had a European and international impact. I was invited to present our work to ESMA (the European regulator, Paris) in April 2024 and then to FINRA (the US regulator in charge of protecting investors, Washington) in November 2024. I also had the opportunity to present our work in March 2024 at a conference organized by the Strasbourg Place Financière association at EM Strasbourg.
Eventually, we plan to publish in an internationally ranked journal.
- Why is it important to popularize this research?
The popularization of finance research is essential to make complex concepts accessible to a non-specialist audience, whether they are decision-makers, individual investors or the general public. In addition, this approach enhances the transparency of academic work, stimulates informed discussions on economic policies and regulations, and increases public confidence in financial institutions. That is the whole point of my regular participation in the AMF's scientific council.
In the case of online trading platforms, the dissemination of clear knowledge about how gamification and copy trading tools influence investor behavior helps regulatory authorities identify potential risks and adapt their oversight policies. This shared understanding helps protect investors while promoting a more transparent and fair market environment.
- What are the expectations of your institutional partners?
The main partner is the AMF, which is the French regulator, and this work is part of its mission to protect investors. The results of the pilot study conducted in spring 2023 showed that reward badges play a symmetrical role in risk-taking, both upward (badges that reward risk-taking) and downward (for badges that reward risk-free saving), which seems to indicate that they can act as nudges and are therefore not systematically harmful. We have also shown that copy trading increases risk-taking by all participants, including those who do not use it, which calls into question the frequent use of this tool on consumer platforms. Finally, some participants are more susceptible to the various stimuli and require specific attention and protection.
- Do you have any feedback or evaluations from the AMF regarding your contributions?
The dissemination of results speaks for itself. The AMF's objective in publishing our work was to contribute to the thinking of international financial regulators, as the issues go beyond the strict French framework.
- How has the project evolved over time? What is still to come?
This research project involves two stages:
- The first stage, the pilot experiment, was conducted in collaboration with and funded by the AMF in the spring of 2023 with more than 350 students from the University of Strasbourg recruited and tested at the Strasbourg Laboratory of Experimental Economics (LEES).
- The second stage is currently underway following the securing of funding from the European Savings Institute in July 2024 to develop the pilot experiment to test a greater number of strategies with a wider audience and internationally via the online platform Prolific, thus ensuring the external validity of our results.
Thank you for taking the time to answer our questions!