doi.org/10.55177/tc191789
By Andrew Ridgeway and Noah Wason
ABSTRACT
Purpose: Robinhood is a financial investment app that claims to “democratize finance” by connecting millennials and historically underserved populations to the stock market. We explore how Robinhood’s user interface shapes investor behavior and the impact this behavior has on existing disparities in the stock market.
Method: We use Sano-Franchini’s (2018) method of critical interface analysis to examine three key microinteractions on the Robinhood platform: depositing and withdrawing funds, browsing, and trading stock.
Results: Our analysis shows that Robinhood’s user interface encourages users to think of themselves as informed investors but does not give them the knowledge or tools they need to invest successfully. A manufactured sense of urgency encourages users to overtrade on their portfolio, contributing to market volatility and diminishing returns over time.
Conclusion: Our analysis considers the relationship between the interface, the user experience, and investment practices. As such, this paper helps readers recognize how technologies that promise to increase inclusion can actually exacerbate existing socioeconomic inequalities.
Keywords: FinTech, Mobile Investment, Predatory Inclusion, User Interface, Microinteractions
Practitioner’s Takeaway:
- Demonstrates the need for UX designers to attend to discrepancies between marketing materials and UX design.
- Examines how interfaces can incentivize reactionary, attention-driven user behavior and decision-making.
- Offers an analysis of an interface that considers how interfaces operate in relation to external markets and parties.
Since launching in 2015, the mobile investment app Robinhood has become one of the world’s most popular financial technology platforms, with an estimated 15.9 million active monthly users. Robinhood claims to “democratize finance for all,” and its commission-free trades, simple user interface, and populist marketing strategy have resonated with many first-time investors. The subsequent influx of new investors has had unforeseen consequences on the stability of the stock market. In 2021, users flooded the Robinhood platform to purchase shares of Gamestop (GME), a struggling videogame company that had recently become a popular “meme stock” on social media platforms like Reddit and Twitter. This sudden buying frenzy prompted wild fluctuations in the market, with the price of GME jumping from $20 to a peak of $483 per share (a 2,315% increase) in the span of a few weeks. The skyrocketing share prices were a source of concern for the National Securities Clearing Corporation (NSCC), which is a government-regulated intermediary responsible for providing clearing, settlement, and risk management services for trades in U.S. securities markets. The NSCC asked Robinhood to post $3 billion to cover a potential collapse in the share price. Since Robinhood did not have these funds readily available, they were forced to restrict trading of GME stock (Roberts, 2021). According to Jeff John Roberts (2021), this reduced the number of “volatile stocks on its balance sheet while also allowing earlier trades to settle, reducing [Robinhood’s] overall risk exposure” (n.p.). The restrictions provoked outrage and elicited conspiracy theories from Robinhood users, who quickly accused the company of colluding with Wall Street hedge funds.
While these claims were ultimately unfounded, they did raise questions about Robinhood’s business model and gamified user interface (Roberts, 2021). Robinhood generates profit in a number of ways. In addition to collecting interest on the uninvested brokerage cash in users’ accounts, Robinhood earns revenue from margin interest, securities lending, and its cash management services (Robinhood, 2023, “How Robinhood”). However, over 80% of Robinhood’s revenue is generated through a controversial process known as payment for order flow (PFOF). When a user places an order, Robinhood passes that order to a third-party known as a “market maker,” who executes the trade on Robinhood’s behalf. The market maker (usually a large hedge fund) purchases securities in bulk at a slight discount and then profits from the difference between the purchase price and the market price (the “bid-ask spread”). In short, Robinhood is a bundler, collecting smaller orders and selling them wholesale to market makers like Citadel Securities. These market makers benefit in two ways. First, they profit from the bid-ask spread. Second, since market makers are working with high trade volumes, they often have the advantage of knowing, in advance, how these trades will impact the market (Seth, 2020). The underlying power dynamics resemble those of a casino: Anyone with money can play, but win or lose, Wall Street takes a cut and always comes out ahead. Far from dismantling barriers to investment, Robinhood exacerbates the power disparity between its users, also known as retail investors, and institutional players by turning the former into a resource that can be leveraged by the latter.
Robinhood is ostensibly required to adhere to Financial Industry Regulatory Agency (FINRA) Rule 5310, also known as the Best Execution Rule. This means they must use “reasonable diligence” to ensure the best price for the customer (FINRA, 2014; Seth, 2020). However, despite enormous leeway in how they interpret and adhere to Rule 5310, Robinhood has been fined for violating it repeatedly (Egan, 2019; Ong & Rote, 2019; Seth, 2020). According to the Securities and Exchange Commission (2020), “Robinhood’s customers received inferior execution prices compared to what they would have received from Robinhood’s competitors” (n.p.). According to the SEC, these inferior prices cost Robinhood’s users approximately $34.1 million, even after accounting for the money they saved through Robinhood’s commission-free trades. They also reported that Robinhood has known for many years that its metrics were substantially worse than other retail brokers, but continued to assert that it was outperforming competitors until it was pressured by the SEC to remove these claims from its website (SEC, 2020).
The discrepancy between Robinhood’s business model and its populist marketing strategy is an invitation to critically examine the power disparities and consequences of Robinhood’s gamified user interface. In this article, we use Jennifer Sano-Franchini’s (2018) method of “critical interface analysis” to examine three key “microinteractions” (Saffer, 2013, p. 3) associated with the Robinhood platform: depositing and withdrawing funds, browsing and notifications, and trading stock. Critical interface analysis, as Sano-Franchini explains, “layers theory, critique, and reflection” (2018, p. 391) to examine how the ideological valence of the interface shapes the user’s embodied experience on the platform. Specifically, it interrogates how the presentation, organizing logic, and meaning-making processes of Robinhood’s gamified user interface might produce interactions, emotional experiences, and relationships that benefit hedge funds at the expense of retail investors. By tracing the simple, affectively charged, and often repetitive moments that shape the user’s experience, we highlight how Robinhood’s interface inculcates risky and unprofitable trading habits.
The first section of this article offers a literature review that draws connections between Robinhood’s user interface and the relationship between gamification, gambling, and investment. Robinhood expands access to the market, but, as we will demonstrate, the offer of inclusion is implicitly predatory. In the second section, we offer a critical analysis of the Robinhood interface, specifically focused on the experience of depositing and withdrawing money, browsing and notifications, and trading stock. We argue these microinteractions cater to what Lee et al. (2023) refer to as “high-risk trading behaviors,” while downplaying the financial dangers of investing (p. 1). Robinhood’s gamified user interface both fosters an ever-present sense of urgency and encourages users to conflate their mastery of the app with mastery of the stock market. Specifically, Robinhood combines visuals, cues, and techniques associated with casinos and the gaming industry with the familiar features of social media to incentivize reactionary, attention-induced trading that harms retail investors. As our analysis reveals, Robinhood’s user interface is not designed to democratize investment, so much as exploit users by capitalizing on their relative inexperience, asymmetrical access to information, and lack of familiarity with the stock market. As we will argue, this “predatory inclusion” has implications for demographics that have been historically excluded from the stock market, including women and people of color.
Speculative Risk and Predatory Inclusion
Robinhood distinguishes itself from competitors like Charles Schwab and E-Trade by presenting high finance in a gamified digital format that resonates with millennials because it resembles social media. Tan (2021) explains that Robinhood’s interface reduces “frictions” associated with investing by making the process simple, interactive, and fun (p. 8). Robinhood’s mission to “democratize finance” often takes a backseat to this design imperative, which involves using game-like features, prizes, and push notifications to maximize user engagement and incentivize short-term speculation over long-term investment. According to Arthur et al. (2016), speculative investing involves “financial market activities that, when compared to investments, tend to be shorter term, higher risk […] with a primary focus on making a monetary profit from price movements” (p. 584). Speculation is investment, but the volatility of the stocks in question introduces a level of risk more frequently associated with gambling. The platform persuades users to engage in attention-driven trading even though this actually hurts retail investors (Andrei & Hasler, 2015; Goddard et al., 2015; Wang et al., 2021; Barber et al., 2022). Users who trade frequently are more likely to see the value of their portfolio diminish over time, but interminable, reactive trading is the bedrock of Robinhood’s business model. While many of Robinhood’s competitors have begun imitating its success by incorporating elements of gamification into their own platforms, Robinhood’s user interface is designed to be as simple, engaging, immersive, and habit-forming as possible. With its users embracing erratic investments and trading more frequently, amateur investors have a lot to lose by accepting Robinhood’s invitation into the stock market (Popper, 2020). Like a casino whose profits increase the more time patrons spend at the slot machines and poker tables, Robinhood’s profit increases the more time users spend engaging with the app.
Robinhood maximizes engagement through gamification, “the use of game design elements in non-game contexts” (Deterding et al., 2011, p. 9). Proponents of gamification (Werbach, 2015) claim it can foster learning, productivity, and user engagement by transforming mundane, repetitive, or time-consuming activities into opportunities for fun and pleasure. However, scholars like Ian Bogost (2014) and PJ Rey (2014) argue that there is something fundamentally deceptive and misleading about gamification, which increases the amount of time, money, and energy people devote to a commodity without increasing its economic value. Far from “democratizing finance,” gamification is a “mechanism of social control” that “minimizes resistance and makes exploitation more efficient” (Rey, 2014, pp. 284, 289). Similarly, Mark Pesce (2014) argues that gamification is intensely problematic because:
Individuals become players-without-playfulness […] in thrall to their own dopaminergic reward systems. This is not a world of free will or even the illusion of free will. It is a world of careful control, conscious manipulation, and enjoyable imprisonment. (p. 110)
By reducing human beings to a series of inputs, gamification produces “environments of ‘continuous control’ that stimulate desire, encourage play or, in [gambling] industry terms, increase ‘time on device’” (Reith, 2018, p. 133). On Robinhood, the satisfaction users get from continuously adjusting their portfolios in real time discourages the more traditional (and more profitable) ‘buy and hold’ approach to investment (Barber et al., 2020; Tan, 2021; Zweig, 2020). The experience of using the app introduces new affective rewards and incentives that keep users engaged but have nothing to do with investing.
Attending to the latent tension between Robinhood’s promise to “democratize finance” and the goals of its gamified user interface is crucial to understanding the casino-like power disparities shaping the platform. While games are innocuous, gamified marketing praxis is explicitly associated with manipulation, exploitation, and psychological distress (Al-Msallam et al., 2023). Scholars have described gamification as a form of “soft power” that can be abused for profit and deception. According to Rey, gamification “is less about coercing unwilling subjects and more about creating willing subjects” (2014, p. 279). Al-Msallam et al. concur, arguing that gamification “manipulates consumers by using mechanics and designs” without explaining “how they work” (2023, p. 40). This lack of transparency produces a power imbalance that makes it easy for designers to exploit users. Robinhood, in particular, “has been criticized for ‘luring’ [financially; emphasis in original] inexperienced consumers with gamification into making irrational investment decisions” (Al-Msallam, 2023, p. 40). These users experience psychological distress when they are confronted with the real-world consequences of activities that initially seemed like harmless online fun.
In a similar vein, gamification has been criticized for fostering addictive behavior. This criticism is particularly salient in the context of the stock market because the line between “investment” and “gambling” was already blurry to begin with (Livingston, 2005; Nicoll, 2019; Reith, 2018). Bedford (2019) considers buying and selling stock “a rich person’s form of gambling” that offers them entertainment (p. 31). Similarly, Albarrán-Torres (2018) describes the stock market as “the most complex casino in the world” and argues that investing and gambling seem to rest on the same promise, which is that “a life-changing event is seemingly in reach” (p. 223). However, investment should be low risk, involves buying and holding assets over time, is expected to produce positive returns, and is not tied to a single event, whereas gambling is high-risk, expected to produce negative returns, and does depend on the outcome of an event (Lee et al., 2023, p. 3, citing Arthur et al., 2016). Both are associated with sensation-seeking and risk-taking (Lee et al., 2023). Gamblers and investors alike are prone to overconfidence, downplay the role of luck, and frequently adopt a system or strategy that offers the illusion of control (Arthur et al., 2016; Grall-Bronnec et al., 2017). Håkansson et al. (2021) argue that “rapid and excessive day trading” may cause gambling disorder (p. 1), while Lee et al. (2023) observe that “there is increasing evidence of gambling within financial markets as well as greater problem gambling severity among financial traders” (p. 5).
Robinhood’s user interface seems designed to capitalize on the overlap between gambling and investing, engineering what Natasha Dow Schull (2012) refers to as the “machine zone,” an unbroken “flow state” normally associated with electronic gambling. Gamblers who find themselves in the machine zone “feel carried by a choreography not of their own making” (pp. 166–167). Far from being empowering, this “flow state” produces a feedback loop that is “depleting, entrapping, and associated with low autonomy,” (p. 167). On Robinhood, investing is designed to take over “the moments of respite in everyday life” (Albarrán-Torres, 2018, p. 222). Like a casino, which uses the maze-like, secluded structure of its main floor and constricted lines of sight to funnel the user’s time, attention, and money in a particular direction, Robinhood is a “digital enclosure” designed to keep users and their buying power in the app (Tan, 2021, p. 9). When Zweig (2020) reached out to Robinhood to ask why its interface incorporates so many “gambling-like visuals,” they responded that the design aesthetics of the platform were intended to “make it feel […] familiar to populations that historically have not been served by the investing industry” (n.p.). This is concerning because Robinhood does not democratize finance–it democratizes speculative risk. By borrowing cues and techniques associated with gambling, Robinhood makes “trading” (a highly technical activity typically associated with large capital and reserved for elites) feel like a common and familiar leisure activity.
Robinhood’s former “lottery ticket” feature offers a useful visual metaphor that helps demonstrate this connection. Until 2021, users who received one free stock for opening an account were presented with a choice between three face-down golden cards. Users selected one of the cards by “scratching” it, which prompted a congratulatory message and a screen full of confetti. As a visual signifier, the scratch ticket indexes a longer history of the lottery as a regressive tax that extracts revenue from Black and low-income neighborhoods, then reallocates that money across the entire community. In cities like Chicago, low-income minorities end up subsidizing public education for affluent white communities through state-sanctioned gambling, which is why Henricks and Brokett (2014) refer to lotteries as a “reverse Robin Hood” that privileges the wealthy at the expense of marginalized groups. Robinhood remediated the familiar experience of scratching lottery tickets to introduce users to a form of gambling historically reserved for the wealthiest members of society but did not change this underlying power dynamic. The promise of universal access to the stock market resembles the idea that everyone has an equal chance of winning the lottery: they are myths that conceal the uneven socioeconomic distribution of risks and consequences.
Targeting users with gambling-like visuals to encourage high-frequency, attention-induced trading is an example of what Seamster and Charron-Chénier (2017) refer to as “predatory inclusion.” The term refers to any “process whereby members of a marginalized group are provided with access to a good, service, or opportunity […] under conditions that jeopardize the benefits of access” (pp. 199–200). Traditionally, the term “predatory inclusion” has been applied to policies and practices that exploit historically underserved populations in the name of equity, opportunity, or inclusion (i.e., payday loans, housing vouchers, etc.). In our critical analysis of Robinhood’s interface, we argue “predatory inclusion” also applies to digital enclosures that lure users into compulsive, risky, or unprofitable trading behavior. For scholars like Tan (2021), the predatory practices embedded in Robinhood’s infrastructure “may also increase trading risks for amateur investors and worsen their vulnerability when pitted against experienced institutional traders” (Tan, 2021, p. 3). In short, Robinhood is an example of what Tarsa and Brown (2018) call “complicit interfaces,” or “computational infrastructures that unavoidably open us to precarity” (p. 259). Robinhood’s interface generates fun, pleasure, and excitement for users, which removes protective friction from the investing process (Ash et al., 2018; Langley & Leyshon, 2021)
Critical Interface Analysis of Robinhood
Robinhood uses its game-like interface to cultivate a sense of urgency and encourage users to indulge in riskier, less profitable, high-frequency trading (Arthur et al., 2016). Robinhood is quick to position itself as a solution to inequality. The platform equates democratizing finance with increasing access to the stock market, but does not consider the terms, quality, or consequences of this access for its users. Subsequently, microinteractions on Robinhood’s interface draw users into a digital enclosure where pleasure and excitement are leveraged to incentivize reckless and compulsive patterns of behavior that often resemble gambling (Grall-Bennoc et al., 2017; Charles, 2021).
Deposits, Withdrawals, and Bill Pay
Anyone can open a Robinhood account, as long as they are at least 18 years old, a citizen or lawful U.S. resident, and they have a social security number, a residential address, and a bank account (Robinhood, 2023, “What You Need”). The approval process is supposed to take between 5–7 business days, but it usually takes 1–2 (Tamburro, 2021). Once approved, users can immediately begin investing money through the app. While it normally takes up to 5 business days to transfer funds from a bank account into a brokerage account, Robinhood allows users to access up to $1,000 as an “Instant Deposit” they can begin trading immediately. Users can also click the “Spending” tab at the top of the desktop interface to be waitlisted for the Robinhood Cash Card, a prepaid debit card linked to the user’s brokerage account. Unlike traditional debit cards, the Robinhood Cash Card gives users the option of rounding up each transaction to the nearest dollar and automatically investing the extra money in stocks and crypto. Robinhood encourages users to take advantage of this feature by giving them between 10–100 percent of their weekly round-up money (capped at $10 per week) as an extra gift (Vincent, 2022).
Money enters Robinhood accounts seamlessly, where it can be instantly converted into stock or uninvested brokerage cash, but the process of withdrawing money from the app is riddled with friction, delays, and ambiguity. While users can set up automatic deposits, investments, and dividend reinvestments through the desktop user interface, there does not seem to be a way to set up automatic withdrawals. Similarly, users who receive a free stock for opening an account can sell it for credit on the app immediately but cannot withdraw its cash value for 30 days (Robinhood, 2023, “Open Account”). While Robinhood offers no shortage of ways for users to immediately deposit money and begin investing in stocks and crypto, the process of withdrawing earnings is more cumbersome. Like a casino that uses its layout, tinted windows, and distracting array of lights and mirrors to keep gamblers on the gaming floor, Robinhood’s platform architecture is designed to keep money circulating on the app.
Browsing and Notifications
Unlike tickers on the stock exchange, which use blue or white to indicate the price of a stock remains unchanged from the previous day’s closing price, Robinhood has no symbol or color associated with stasis. On the Robinhood platform, stock is always either increasing or decreasing in value—even after the market has closed. The symbols and color palette of the interface create an impression of transience and sense of urgency that encourage users to make frequent adjustments to their portfolio. By using red and green to denote gains and losses, Robinhood is invoking an affective appeal to its users. Green implies money and success, while red is associated with danger, stress, anger, and financial loss. Subsequently, green pyramid icons next to a stock ticker signify the stock’s value is escalating. This invites users to get in on the action while they still have a chance or sell while the stock’s value is still escalating. A red inverted pyramid next to a stock ticker, in contrast, signals that a stock’s value is decreasing. This is either a warning to cut one’s losses or a time-sensitive opportunity to take advantage of a temporary ‘dip’ in the price of the stock. Regardless, these interactions between the user and the interface are meant to be quick and frequent, which lead Grall-Bennoc et al. (2017) to compare day trading to using a slot machine.
Many Robinhood platform features encourage the short-term, high-risk behaviors associated with speculative investing. In addition to tickers, browsing Robinhood also involves interacting with simple graphs designed to chart the value and price fluctuations of different stocks. When users click on a particular stock to learn more about it, they are taken to a line graph depicting the stock’s movement over the course of that day. The header in Figure 1 above the graph lists the name of the company (“AMC Entertainment”) and the current price of the stock, which fluctuates frequently. Beneath the price of the stock, there is a ticker that displays how much the price of the stock has fluctuated over a specific period of time. Users can click the tabs below the graph to access corresponding graphs for the previous week, month, three months, year, and five years, respectively. The line in the graph is always displayed in green or red, depending on whether the price of the stock is up or down for the selected period of time. This means a line graph displayed in red on one tab can be green in another (and vice versa) depending on the overall trend of the stock price. Users also have the option of adding their own push notifications set to different price thresholds for the stocks they are following. Rather than helping them to understand contextual factors shaping fluctuating stock prices throughout the day, Robinhood encourages users to see investing as a matter of focused attention and opportune timing.
Users can click the “Advanced” icon in the right-hand corner of the basic graph to access a larger, more intimidating graph that is supposed to offer them more information. The “Advanced” graph as shown in Figure 2 displays the price, moving average, relative strength index, and moving average convergence divergence. Users can hover over each term in column on the left side of the screen to open a window offering a brief definition and a link to a Robinhood Help Center page with more information about the seven “technical indicators” users can access through the platform interface.
These graphs help the Robinhood platform rhetorically situate itself as a “technical analysis” of the financial market. Unlike fundamental analysis, which examines a range of factors (including potential for growth, projected cash flow, interest rates, industry conditions, and the relative strength of the economy) to determine the value of a company, technical analysis transforms “price, volume, and open interest data […] into visuals using mathematical formulas […] to help identify trends and find opportunities to enter or exit positions” (Robinhood, 2023, “Technical Indicators”). However, Robinhood’s attempt to position itself as a tool for technical analysis is ultimately disingenuous. Technical analysis is complex, which is why brokerage firms like TD Ameritrade and Fidelity chart hundreds of technical indicators (Gopalakrishnan, 2020; Fidelity, 2023, “Technical Indicator Guide”). Additionally, as Arthur et al. (2016) have argued, chance plays a much bigger role in the financial markets than professional analysts and traders acknowledge, as evidenced by the fact that “only a small percentage of professional analysts and traders are able to consistently outperform the average return of the market” (p. 583). Robinhood is primarily designed to make it easier to invest, not communicate risk or produce a return on that investment.
While the simplicity of the app might increase the overall number of retail traders buying and selling stock, Barber et al. (2022) argue that Robinhood’s “streamlined and simplified interface […] reduces cognitive burdens, which leads investors to rely more on their intuition and less on critical thinking” (p. 3143). Robinhood’s graphs, in particular, are an example of what Albarrán-Torres (2018) refers to as “procedure-images,” a term that describes “a system of symbols that defines what the digital platform ‘says’ or ‘does’” (p. 277). By familiarizing themselves with these symbols, users, much like gamblers, start to develop illusions of expertise and agency (Grall-Bronnec et al., 2017). The simplicity of Robinhood’s user interface encourages users to believe that understanding the stock market is as simple as mastering the interface, but knowing how to use the platform is not the same as knowing how to make a wise investment. So, while simplified graphs and algorithmically curated lists of recommended stocks ostensibly educate would-be investors, they also risk making Robinhood’s users more impulsive, overconfident, and reckless with their investments.
This behavior is reinforced through “push notifications with customized content like earnings reports and significant price movements [that] constantly exhort users to engage with the app” (Tan, 2021, p. 9). Like many forms of speculative investing which require attention to events that occur in real time, these push notifications foster a sense of urgency (Arthur et al., 2016). By making users feel “in the know,” they make attention-induced trading seem like a sound financial strategy. Robinhood is very good at “nudging” people into using the app, in part by encouraging them to think of themselves as informed investors who can use real-time updates to take advantage of fleeting opportunities to game the market. In 2020, a New York Times article interviewed users who reported checking the app between 10 and 50 times per day (Marcus, 2020). Taken together, the graphs, tickers, and push notifications that shape the experience of browsing on the Robinhood app help illustrate how its user interface capitalizes on affective states as “primary tools for (self-)orientation and steering individuals” (Fischer, 2022, p. 328). Robinhood does not just encourage users to invest. It shapes and automates the experience of investing to make it more emotionally engaging and habit-forming.
Buying and Selling
The Robinhood mobile app is famous for “its signature swipe-up gesture that confirms a stock transaction” (Tan, 2021, p. 8). Swiping has become an ubiquitous feature of mobile interfaces, and scholars have critiqued the “swipe logic” of contemporary mobile apps for fostering passivity, detachment, and apathy (Kingwell, 2019). In the context of Robinhood, however, “[t]his deceptively simple movement of swiping the finger up across the screen generates a sense of familiarity among millennial and digitally savvy investors who navigate their lives around their smart-phones” (David & Cambre, 2016, as cited by Tan, 2021, p. 8). By designing its interface around features its users will recognize from other contexts, Robinhood eases first-time investors into the unfamiliar and potentially predatory world of the stock market (Tan, 2021). Robinhood makes buying and selling stock trancelike and exciting, like electronic gambling in casinos. The constantly changing numbers and colors of the Robinhood user interface keep users tapping and swiping, even when they do not fully understand the process they are participating in (Zweig, 2020). Like casinos, which use their architecture, design, and layout to cultivate an unbroken experience of play, Robinhood’s simple, one-swipe trading interface helps produce an immersive “flow state” that increases the amount of time, money, and attention users spend on the app.
The simplicity of Robinhood’s one-swipe trading contrasts with the process of canceling a trade, which requires more steps and includes tapping a red “cancel order” button.” Each step introduces a new source of friction that helps protect the payment for order flow, which is one reason scholars like Gray et al. (2018) and Tan (2021) accuse Robinhood of using its interface to guide users toward outcomes that are at odds with their best interest. Crucially, Robinhood’s user interface is primarily concerned with whether users trade frequently, not whether they trade profitably: “for every dollar in the average customer account, Robinhood users traded nine times and 40 times as many shares as E-Trade and Charles Schwab customers respectively” (Popper, 2020, n.p.). Barber and Odean (2000) have shown that retail investors generally receive lower returns when they overtrade on their portfolios. This is exacerbated by the fact that retail traders are particularly vulnerable, since they do not always have the net worth to absorb losses and protect them from the fluctuations of the market (Albarrán-Torres, 2018). Even when retail traders are successful, institutional players continue to enjoy structural advantages, including more capital, better data, and complex trading algorithms. Individual users might see some return on their investment but, collectively, the financial institutions Robinhood claims to disrupt will always come out ahead.
From this perspective, Robinhood is an example of what Johnson and Johnson (2020) refer to as “affective data technologies,” which use “aggregates of data to (re)orient desire, even when that desire leads subjects into precarious situations” (p. 379). According to Johnson and Johnson, affective data technologies leverage the rhetoric of data and statistics to inculcate certain patterns of behavior via habit, pleasure, and compulsion. Robinhood claims to maximize choice, but the user interface offers a persuasive example of how “standardized data can compel humans to become entrenched in rhetorical ecologies that contribute to their own vulnerability” (Johnson & Johnson, p. 370). Far from “democratizing” finance, Robinhood offers its users an exciting, gamified choice architecture that exploits their inexperience, incentivizes unprofitable decision-making, and helps hedge funds maintain their economic dominance at the expense of retail investors—all while misrepresenting Robinhood as a servant of the people.
One specific affective data technology Robinhood uses to “democratize” the stock market is its algorithmically curated lists of recommended stocks. The “100 Most Popular” list, for example, ranks the most commonly held stocks with a market capitalization of more than $300 million. The list is based on the number of customers who hold a position in each security, without considering the size of each position (Robinhood, 2023, “100 Most Popular”). Another list of “Daily Movers” displays the top ten stocks with the largest percentage increase in their prices, as well as the top ten with the largest percentage decrease. Like the “100 Most Popular,” the “Daily Movers” is updated throughout the day and only includes securities with a market capitalization of $300 million or more (Robinhood, 2023, “Daily Movers”). These criteria belie the apparent objectivity of algorithms, which, according to many scholars of digital rhetoric, should be considered powerful rhetorical actants in their own right (Reyman, 2017). In other words, the assistance algorithms provide should never be taken as politically or economically neutral, because they serve an explicitly persuasive function (Shepherd, 2020). While the “Daily Movers” and “100 Most Popular” might present themselves as purely informative, “how information is displayed both help[s] and hurt[s] investors” (Barber et al., 2022, p. 6). Taken together, these algorithmically curated lists are but one example of how Robinhood’s interface steers users toward specific stocks and certain kinds of trading.
As rhetorical inducements to action, the “Daily Movers” and “100 Most Popular” lists contribute to “herding,” a term Barber et al. (2022) use to describe how attention-induced trading encourages periods of intense buying concentrated on a small handful of stocks. According to Barber et al. (2022), approximately 35% of net buying on Robinhood is focused on 10 stocks (p. 3142). This attention-induced trading is not profitable for Robinhood’s users. The top 0.5% of the most highly traded stocks each day experience an average negative return of 5% the following month, while extreme herding events lead to negative returns of almost 20% (p. 3143). However, while attention-driven trading is not profitable for users, it is the core of Robinhood’s business model. Robinhood’s position as a “bundler” gives it a strong incentive to promote reactionary, high-frequency trading, even though doing so consistently results in negative returns for its users over time.
Conclusion
As our critical analysis of Robinhood’s interface illustrates, expanding access to the stock market is not the same as democratizing finance—especially when the terms of that inclusion are implicitly predatory. Robinhood claims to help retail investors access the stock market, but it is actually designed to help Wall Street access retail investors. Populist branding aside, Robinhood is neither a servant of the people nor a neutral intermediary but, rather, a “bundler” with a strong incentive to maximize user engagement by encouraging retail investors to trade as quickly and frequently as possible. Robinhood’s graphs, tickers, and algorithmically curated lists of stocks invite users to think of themselves as informed investors engaged in highly technical financial analysis. Users learn to conflate mastery of the app with mastery of the stock market. Meanwhile, the protean interface fosters a sense of urgency that keeps users logging back into the app to tinker with their profile, afraid to miss an opportunity to “game” the market, despite the wealth of evidence that high-frequency, attention-driven trading contributes to market volatility and harms retail investors. In other words, Robinhood does not democratize investment—it democratizes speculative risk. The gamified user interface uses the same cues, visuals, and techniques as the gambling industry, thus producing a casino-like platform that lures users into compulsive and unprofitable trading behavior.
However, as scholars like Reith (2019) have observed, the consequences of these “aleatory environments” are not distributed evenly across the population (p. 133). Many Robinhood users who invested in GME, for example, were first-time investors with little or no savings (Brown, 2021). They did not have the net worth to absorb heavy losses or protect them from the fluctuations of the market. Robinhood’s complicity in exposing users to precarity is alarming in the context of its mission to “democratize finance,” which presumably involves expanding its userbase to include low-income and marginalized communities. In fact, Robinhood is already aggressively marketing itself to demographics that have historically been excluded from the stock market, including women and people of color (Howard, 2021; Freyman, 2021; Dagher & McCabe, 2021). While equal access to economic opportunity is undeniably important, the risks and consequences of Robinhood’s business model and user-interface might have for vulnerable communities are only beginning to come into focus. Gambling is merely one example of how marginalized communities have historically shouldered the long-term economic consequences of industries that generate revenue via speculative risk. By calling attention to the implicitly predatory and potentially exploitative elements of Robinhood’s user interface, we hope to set the stage for future studies that examine the financial impact the Robinhood platform has on women and people of color.
Scholars and practitioners of technical communication are uniquely situated to explore these and other ethical quandaries associated with predatory digital enclosures like Robinhood. Like many tech companies, Robinhood employs rhetorically sophisticated techniques that occupy a gray zone between persuasion and compulsion. As its branding, mission statement, and marketing materials all demonstrate, the company excels at simplifying highly technical information for a general audience. The juxtaposition of its messaging with the opacity of its business model and user interface allows scholars to attend to the disconnect between what tech platforms like Robinhood promise and what they actually deliver. If Robinhood is truly committed to democratizing finance, it could begin by curtailing its most predatory practices and expanding the range of resources, goals, and strategies users can access through the interface. In addition to better educating news users, it could scale back the barrage of push notifications and email updates urging users to return to the app, for example, or develop new features that incentivize balanced portfolios and a “buy and hold” approach to investment. Instead, Robinhood’s gamified user interface leverages microinteractions that foster frequent, risky trading and ultimately benefit hedge funds at the expense of retail investors. In many ways, Robinhood resembles a casino, with Wall Street assuming the role of the house. Anyone can play, but the house always wins.
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About the Authors
Andrew Ridgeway is a PhD candidate in the composition and cultural rhetoric program at Syracuse University. His research focuses on classical rhetoric, digital rhetoric, and critical theory. Andrew can be contacted at aridgewa@syr.edu.
Noah Wason, Ph.D. is a Lecturer in the Writing Initiative at Binghamton University. His research focuses on the intersections between rhetorical theory and technology, notably the connections between ethos, surveillance, and the algorithmic technologies that power social media platforms. His work has appeared in Rhetoric Review, Rhetoric of Health & Medicine, The Journal of Interactive Technology & Pedagogy, and other venues. Noah can be contacted at nwason@binghamton.edu.