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The options trading interfaces on E-Trade (L) and Robinhood (R). Illustration: Axios

To understand why Robinhood is so popular, it's best to think in terms of game design.

Why it matters: While other brokerages sell ultra-sophisticated investing tools or boring things like retirement planning, Robinhood makes an addictive mobile-native game.

As Matt Levine wrote in November:

"You can analyze Robinhood as a mobile gaming company. It makes an app that you can download to your phone, and then you can play a game on the app. As with many mobile games, there are in-app purchases, and you can end up spending a lot of money on the Robinhood game. The game is of course a stock-trading game. The purchases are stocks."

What they're saying: Noah Brier, of the indispensable Why Is This Interesting daily newsletter, this week compared E-Trade's option trading interface to Robinhood's.

"The former makes options look like a very serious thing you can lose a lot of money on. The latter resembles rating a YouTube video."

The bottom line: When a professional investor like Leon Cooperman says that the Robinhood mania will "end in tears," he's absolutely right on a literal basis: Bad design decisions might well have cost a young man's life. But if what he's talking about is total investment returns, he could be making a category error. People are attracted to games because of the enjoyment of playing them much more than because of the pleasure they get from any winnings.

Go deeper

Dan Primack, author of Pro Rata
Sep 21, 2020 - Economy & Business

Retail traders drove Snowflake and Unity Software's IPO surges

Illustration: Sarah Grillo/Axios

The story of last week's Snowflake and Unity Software IPOs had little to do with data warehousing or 3D game development, and lots to do with dizzying "pops" after pricing.

What happened: The Robinhood effect.

9 hours ago - World

Maximum pressure campaign escalates with Fakhrizadeh killing

Photo: Fars News Agency via AP

The assassination of Mohsen Fakhrizadeh, the architect of Iran’s military nuclear program, is a new height in the maximum pressure campaign led by the Trump administration and the Netanyahu government against Iran.

Why it matters: It exceeds the capture of the Iranian nuclear archives by the Mossad, and the sabotage in the advanced centrifuge facility in Natanz.

Scoop: Biden weighs retired General Lloyd Austin for Pentagon chief

Lloyd Austin testifying before Congress in 2015. Photo: Chip Somodevilla/Getty Images

Joe Biden is considering retired four-star General Lloyd Austin as his nominee for defense secretary, adding him to a shortlist that includes Jeh Johnson, Tammy Duckworth and Michele Flournoy, two sources with direct knowledge of the decision-making tell Axios.

Why it matters: A nominee for Pentagon chief was noticeably absent when the president-elect rolled out his national security team Tuesday. Flournoy had been widely seen as the likely pick, but Axios is told other factors — race, experience, Biden's comfort level — have come into play.

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