Study: Consumers are likely to be sensitive to the neat graphic design of trading platforms

TROY: In today’s digital society, online investment trading tools have become commonplace. The same goes for user design elements like flashing charts, commission-free trading, and notifications on mobile devices. But preliminary results from a new study from Rensselaer Polytechnic Institute’s Lally School of Management indicate that new investors could fall prey to these sophisticated elements of web design, putting their money at risk.

Research by Gaurav Jain, behavioral economist and assistant professor at Rensselaer, and John Chen, undergraduate biology student in Rensselaer’s accelerated BS/MD program, explored how certain graphical designs on decentralized finance (defi) applications can target an investor’s inexperience to elicit quick, uninformed decisions, using an investor’s intuition rather than information.

“Although the research has not yet been peer-reviewed, these early findings clearly indicate that new traders are more fallible to behavioral biases and heuristics that can negatively impact their trading,” Jain said in a recent press release.

In recent years, groundbreaking developments in blockchain technology have combined with the isolating effects of the pandemic to drive unprecedented numbers of inexperienced individuals to use challenge and cryptocurrency services like Coinbase, Gemini, and OKCoin.

Despite all the new tools available to them, many of these new traders lack the proper training and cross-checks that institutional traders have. The results suggest that if left unchecked, many people may end up wasting their hard-earned savings as a result of poor business decisions classified as cognitive errors.

The influential design components that Jain found on defi apps applied a wide range of behavioral science theories. Features such as random rewards, where sites randomly give various amounts of cryptocurrency to users, thereby gamifying the investment process, non-linear axis scaling effect on charts that distort perception people, and even the choice to display price changes in red and green, have all been shown to influence the behavior of a cryptocurrency investor.

“The field of behavioral science analyzes the shortcomings that humans face in their decision-making through a psychological lens,” Jain said. “Giving this information to everyday retail traders can empower them to make better choices for their portfolios by being aware of and understanding the designs and heuristics they are subject to.”

The behavioral effects of graphic design choices and design architecture have already been well documented on other applications, from social media platforms to travel sites. Jain’s research looked at data from cryptocurrency apps.

The next steps for the researchers will be to complete the full analysis and submit it for peer review. – The Record, Troy, NY/Tribune News Service

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