Abstract
Digitalisation and social media have transformed investment platforms, making trading more accessible and interactive. Many apps employ Digital Engagement Practices (DEPs) - behavioural techniques, gamification, and design features - to boost user engagement. While these features lower barriers to entry and promote participation, academia and regulators warn that DEPs may exploit behavioural biases, particularly among young, less financially literate investors, encouraging riskier decisions misaligned with their profile.
Financial literacy is considered a key defence against these risks. Yet, empirical evidence on its mitigating role remains scarce. This study addresses this gap through a randomized experiment conducted jointly by the University of Calabria (UniCal) and Bank of Italy, involving master’s students from UniCal University. The study investigates: (i) whether financial education messages (information treatment) actively protect individuals by reducing or offsetting the influence of engagement practices; (ii) whether individuals’ pre-existing financial knowledge acts as a defence, making them less susceptible to app-induced decision-making errors (heterogeneous effect of financial education). Additionally, we explore heterogeneity by gender, academic background, financial experience, and risk profile.