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Ecological interface design for financial trading: Trading performance and risk preference effects

Abstract:

We report an experimental study that involves understanding how display (conventional or ecological) and system mode (profiting, neutral or losing) affect financial trading performance and risk preference. Twenty-four undergraduate and graduate student participants interacted with a financial trading simulator in the playback of a real market. Each participant completed a conventional display scenario and an ecological display scenario that were presented in a counterbalanced sequence. The participants performed buying and selling executions on a financial product based on the portfolio status and their own judgement of the market movement. The participants' trading behaviors were recorded. The conventional display included a market panel, a portfolio panel, a trading history panel and a trading command panel. The ecological display included all panels from the conventional display as well as a multivariable visualization showing the causal relationship between the market, the portfolio and the trading executions. Results on the display type effect showed that the ecological display neither improved nor degraded trading performance. However, the participants held a significantly larger position size with the ecological display than with the conventional display, indicating a risk-seeking portfolio with the ecological display. Results on the system mode effect showed that the participants were more likely to take a moderate risk-seeking action (i.e., holding the portfolio) while the system was making a profit than while the system was in a neutral state. This study is the first experimental study to evaluate ecological displays in a financial trading setting, and has implications for designing financial trading displays.