GameStop Hearing Exposes a Sick Business Model Destined to Exacerbate Wealth Inequality in America

Pam Martens and Russ Martens of Wall Street have an excellent article on how Robinhood uses behavioral tools to encourage people to trade all while the real customer is Citadel who buys Robinhood order-flow. From the hearing:

“So on the specifics, when people sign up they get a scratch-off ticket to see what they get; confetti falls every time they place an order; they get push notifications; they’re encouraged to trade; if a friend signs up they get a free stock. On and on. Why have you added specific gaming design elements to look like gambling to your app that encourages more frequent trading?”

Published by markskidmore

Mark Skidmore is Professor of Economics at Michigan State University where he holds the Morris Chair in State and Local Government Finance and Policy. His research focuses on topics in public finance, regional economics, and the economics of natural disasters. Mark created the Lighthouse Economics website and blog to share economic research and information relevant for navigating tumultuous times.

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