Abstract

US stock markets have created the greatest wealth in human history. This wealth, however, has not been shared or distributed equally. I seek to understand the way in which income disparities work to undermine mechanisms within the market itself. This Thesis addresses a proposed means for making wealth creation more equitable - so-called ‘democratization’ of the stock markets. I argue that one iteration of the approach, exemplified by the retail trading firm Robinhood, does not fulfill this equity ideal. Robinhood makes it cheaper and easier for ‘regular folks’ to get into finance. By way of both its business model and app design and user interface, it has detrimental effects on equity in financial markets. Financial markets can be a force for good, but only as long as they operate to meet their own appropriate goals of efficiently and productively allocating capital resources. Robinhood-style trading, however, creates an environment more similar to a casino than an auction, potentially harming Robinhood traders and distracting finance professionals with the lure of easy new money. Wealth generation in this context comes apart from the allocative purpose of the market. This concern can be mitigated with intelligently designed adjustments to the system that align profitability with ethicality. Such behavioral and structural changes can originate from market participants, technology providers who create the platforms used by participants, or market regulators.