Authors: Palash Jauhari
Abstract: Discount-broking applications have transformed retail access to Indian capital markets. Zero brokerage on equity delivery, paperless onboarding and one-tap order execution have removed long-standing financial and operational barriers. At the same time, regulatory studies show that more than nine in ten individual traders in equity futures and options (F&O) lose money. This paper asks whether, and through which channels, the design of a trading application shapes how often and how speculatively its users trade. We make three contributions. First, we develop a conceptual framework that links six product-design levers (visual salience of profit-and-loss and top movers, gamification, order friction, push notifications, derivatives prominence and voluntary friction tools such as a kill switch) to behavioural mediators (attention, fear of missing out, overconfidence, myopic loss aversion and loss-chasing) and to measurable investor outcomes. Second, we set out a mixed-methods empirical design (a platform design audit, a survey, a randomised interface experiment and interviews) together with its econometric specification. Third, we build and run an agent-based model of 5,000 heterogeneous investors, simulated over 30 Monte Carlo replications, and use it to test the internal logic of the framework and the identification strategy. Under our stated assumptions, an engagement-first design generates about 4.1 times as many orders per month as a utility-first design (6.6 vs. 1.6), a higher F&O share of orders (32.0% vs. 12.1%), shorter holding periods (26.8 vs. 43.6 days) and far higher derivatives adoption among novices (50.4% vs. 13.6%). A voluntary kill switch reduces F&O orders by only 5.6%, whereas a mandatory cooling-off step reduces them by 40.7%. Because these results come from a calibrated simulation rather than observed trading data, we present them as quantified hypotheses and as a validated research design, not as empirical estimates. We close with implications for ethical product management in fintech and for the Securities and Exchange Board of India (SEBI).
DOI: https://zenodo.org/records/23013075
