The impact of mobile device usage on lottery behavior: evidence from China

ABSTRACT

This paper examines how mobile device usage affect retail investors’ lottery behaviour. Using data from the Chinese stock market, which is dominated by retail investors, we observe a structural change in mobile investing trends in 2015. By employing a structural shift model, we find that higher mobile device usage in the market disproportionately increases the trading volume of lottery stocks and amplifies the lottery-related pricing anomaly. Our results suggest that the use of mobile devices increases retail investors’ demand for lottery stocks by attention-induced trading, but fail to find evidence that mobile devices influence retail investors’ inherent skewness preferences.

KEYWORDS:

• Mobile investing
• lottery stocks
• investor attention
• skewness preference

JEL CLASSIFICATION:

• G11
• G14
• O33

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ For example, Barber et al. (2021) find that Robinhood presents a unique “top mover” list which directs users to pay more attention to the stocks on the list.

² Baidu search index on mobile devices is only available since January 2011.

³ The removal of the “one-person-one-account” restriction in April 2015 may also move investors to use mobile devices because the opening another online account can easily operate on the apps.

Additional information

Funding

We acknowledge the financial support from the National Natural Science Foundation of China (Grant No. 71790592, 71771147)