Designing Trading Simulations for Learning: Ranking Feedback, Tournament Incentives, and Behavioral Responses

Abstract

Trading simulations are widely used in finance education, but their pedagogical effects depend on instructional design. Competitive rules and performance feedback may shape trading behavior. This study examines a classroom intraday trading simulation involving CAC40 stocks in which students operated under a continuously updated ranking and a Top 3 reward scheme, creating a rank-order tournament with pedagogical issues. Using data from 133 students, we analyze performance heterogeneity through a distribution-sensitive methodology that combines quartile and extreme-group profiling with quantile regressions.

The results show that excessive trading activity is associated with lower-ranking outcomes, while sustaining top-ranking performance strongly depends on maintaining sufficient market exposure. These findings indicate that different segments of the ranking distribution are shaped by different behavioral mechanisms, which mean-based analyses may fail to capture. We also incorporate OCEAN personality traits to support a profiling perspective. Personality traits help identify localized behavioral differences across distribution segments even if they did not represent a uniform predictor of performance.

For financial educators, continuously visible rankings and tournament-style rewards should be treated as instructional design choices, not purely evaluative tools. They can increase engagement and may also intensify over-activation and suboptimal decisions unless paired with structured debriefing and behavioral supports.