Brokers, Casinos, and Social Media Are Turning Nearly Everyone Into Digital Addicts

The pandemic turned America into a nation of gamers, traders, and digital speculators. Meme stocks, Bitcoin, and $300,000 “bored apes” have become signs of the times. Yet even with office life returning to normal, leaving less time for speculation, the gaming of our minds and wallets may just be getting started.

Companies are blending sophisticated software, behavioral-finance techniques, social media, and neuroscience tools to nudge consumers and investors into buying, trading, and online gambling. Silicon Valley built empires by hooking us on technology, of course, whether it’s hankering for a “like” on Instagram, clicking “buy it now” on


or placing a $1 trade on

Robinhood Markets

(ticker: HOOD).

But as we spend more time with our devices and apps, we’ve become more susceptible to techniques that keep us digitally engaged, according to experts in behavioral psychology. Rivalries for our time and dollars are heating up—

Meta Platforms

(FB) cited TikTok chipping away at its user base for its recent earnings miss. New blends of social media, videogaming, and online trading are emerging. StockTwits recently launched crypto trading on its social-media platform. On Axie Infinity, a digital-pet universe and blockchain gaming platform, players have swapped nearly $4 billion worth of nonfungible tokens, or NFTs, in the past two years, according to data site CryptoSlam.

“Everything has been gamified, and it’s something that’s socially sanctioned,” says Anna Lembke, a Stanford University psychiatrist and author of the book Dopamine Nation. “It isn’t cool to be addicted to heroin,” she says, “but it’s cool to be in something like Robinhood or Bitcoin—then you’re like Elon Musk, rather than a down-and-out person.”

Some digital tools are drawing harsh scrutiny in Washington. Facebook,


and YouTube have defended their practices in Congress against claims that their algorithms and apps are designed to influence public discourse and addict users. Facebook testified in a hearing that it is working to combat harmful content and misinformation, while a YouTube executive said responsibility was the company’s “No. 1 priority.” Twitter highlighted a “responsible machine- learning” initiative that it said would “address potential unintentional harms.”

Online brokerages also face more scrutiny over their app designs and features. The Securities and Exchange Commission launched an inquiry this past summer of the industry’s “digital-engagement practices,” including behavioral prompts, gamelike features, social-networking tools, and celebrations of trading. Moreover, the SEC appears concerned about the influence of artificial-intelligence tools, like machine learning, that could be targeting “neurological rewards systems of retail investors,” the SEC said in its request for public comment. The SEC declined to comment.

Companies have nudged consumers with “gamification” strategies at least since the days of McDonald’s scratch cards, credit-card rewards, and airline points. Brokerages have long vied for wealthy clients with steak dinners, golf outings, and Super Bowl tickets. The new digital tools, some firms argue, just adapt those practices into digital formats and expand them to the masses. If they encourage more market participation, the SEC “should be celebrating this fact,” Robinhood said in a response letter to the agency.

Still, the software, hardware, and neuroscience are converging in ways that may be reconditioning our brains—rewiring our neural circuitry. The primary target is dopamine, a neurotransmitter known as the “pleasure chemical.” Dopamine gets released in response to pleasure—eating a piece of cake, having sex, making a killing on a trade. It’s highly sensitive to variability and novelty. And it doesn’t take much to trigger it online: a “like” for a social post or completing a mission in a videogame can unleash it.

“These rewards release dopamine, followed by a deficit state that kicks off a craving for more,” says Lembke. The dopamine rush itself isn’t what keeps us coming back, she adds. It’s the biological craving to replenish it—prompting us to check our phones, trade, or go back to an app that triggered it. And guardrails that once kept impulses in check—like getting in a car to go shopping, visiting an ATM for cash, or paying commissions to buy a stock—have been eviscerated by technology that’s with us 24/7, if not literally wrapped around our wrists.

“With drugs like cocaine, there’s a natural stopping point—you run out of coke or money, or your nostrils bleed,” says Lembke. “That’s not true with TikTok, Robinhood, or Snapchat. What we have is unlimited access and quantity.”

App design, meanwhile, aims to hook users through four basic mechanisms, says Nir Eyal, a behavioral-design expert and tech entrepreneur. One way is to trigger us to action through a prompt, like a push notification. Apps may also aim to leverage an uncomfortable emotional state—boredom, fear, or uncertainty—and design products that, with a click or two, alleviate the discomfort.

Another technique is the variable reward—such as a trading profit or social-media like. And the more we use a product, adding data, content, or followers, the more valuable it becomes, luring us back and making it harder to switch to another site or product. “Your data makes the product better with usage,” says Eyal. “If you’re following certain stocks, Robinhood has an excuse to reach out to you.”

The crypto industry epitomizes how videogaming, trading, and gambling have become intertwined. More than 15% of Americans traded cryptos last year, up from 1% in 2015, according to the Pew Research Center. Cryptos have exploded in variety and price—reaching more than 10,000 tokens with a market cap of $2 trillion, most of it in Bitcoin and Ether. “Play to earn” has become a new revenue model for blockchain-based games using NFTs. StockTwits’ new crypto platform would be joining others that combine social networking with trading, including eToro, which calls itself the “world’s leading social investing platform.”

Many apps aim to create a party-like atmosphere. Robinhood, while no longer showering traders with animated confetti, still celebrates milestones like funding an account or placing a first trade with animation and graphics. Stash Financial, a personal-finance and trading app, promotes a monthly Stock Party that offers shares as a bonus for signing onto the app that day. “Bring friends to pump the pot,” Stash says on its site, though the company says it doesn’t encourage day-trading.

Such practices are pervasive across social media, e-commerce sites, and other online platforms. But the brokerage industry is far more tightly regulated than other online venues, and its practices raise concerns about conflicts of interest, says James Tierney, a former SEC senior counsel and co-author of a recent paper titled “On ‘Confetti Regulation.’ ”

“Democratizing investing is a notable goal, but putting a casino-like environment on your phone isn’t consistent with studies on retail trader performance,” he says. “That’s not a reason to tell people they can’t trade, but it is a reason to be skeptical that gamified trading is the same as building wealth.”

App designs and features that incentivize trading aren’t necessarily harmful—investors can exert self-control, opt out of notifications, and impose other restraints on their impulses. But some studies point to herding behavior that arises from social-networking on the apps, and that usually doesn’t end well.

About 35% of the stock bought by Robinhood users are concentrated in 10 companies, compared with 24% by retail investors overall, according to a forthcoming study in the Journal of Finance. Investors tend to congregate in stock “herding events,” the authors write. The results don’t look encouraging. The authors find that Robinhood traders lose an average of 4.3% during each herding episode. After adjusting for market returns, losses hit 5.5%.

Robinhood declined to comment to Barron’s but has said most of its customers “use a buy-and-hold strategy.”

The simplicity of Robinhood’s app captures investors for two reasons, the authors write. The app prominently displays lists of stocks in an environment “relatively free of complex information.” And the streamlined interface, combined with cost-free trading, leads investors to “rely more on their intuition and less on critical thinking,” the authors conclude.

Arepresentative for Robinhood declined to comment, saying that the company’s position is outlined in its letter to the SEC. Robinhood “simply aggregates and presents complex information in ways that customers find useful,” the firm said in its letter.

The SEC appears concerned that some of these marketing practices are going too far. Social-networking tools, games, and contests with prizes, leaderboards, and push notifications may be designed to “increase revenues, data collection, or customer time spent on the platform,” the SEC said. Customers may be encouraged to trade based on nudges that closely resemble recommendations or “calls to action.” And conflicts of interest arise since many brokerages no longer charge commissions to trade; their revenues are now tied to routing high volumes of orders to market makers, a controversial practice known as payment for order flow.

Brokerages like Robinhood disclose those payments as a potential conflict of interest. They argue that rules limiting their digital practices could infringe on their First Amendment rights. “Any regulation that results in less customer engagement and less customer choice is a bad policy outcome,” Robinhood told the SEC.

The more our apps learn what we like, however, the more we may be steered into trading cryptos, stocks, NFTs, or anything that promises a reward, replenishes our dopamine, and keeps us coming back for more. “Securities laws are designed to protect people from their worst speculative impulses,” says Tierney. In our new, gamified culture, it’s only getting harder to keep those impulses in check.

Write to Daren Fonda at

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