Robinhood’s gamification makes trading fun and exciting — what could possibly go wrong?
Wall Street isn’t a game you can win
Games explained
Generally speaking, games – whether played on a board, among children or with a computer –are voluntary activitiesthat are structured by rules and involve players competing to overcome challenges that carry no risk outside of their virtual world.
The reason games are so captivating is that they challenge the mind tolearn new thingsand are generally safe spaces toface and overcome failure.
Games alsomimic rites of passagesimilar to religious rituals and draw players into highly focused “flow states” that dramatically alter self-awareness. This sensory blend of flow and mastery is what makes games fun andsometimes addicting: “Just one more turn” thinking can last for hours, and players forget to eat and sleep. Players who barely remember yesterday’s breakfast recall visceral details fromgames played decades ago.
Unlike static board games,video gamesspecifically providevisual and auditory feedback, rewarding players withcolor, movement, and soundto maintain engagement.
The power of angrier birds
The psychological impact of game play can also be harnessed for profit.
For example, many free-to-play video games such asAngry Birds 2andFortnitegive players the option to spend real money on in-game items such as new and even angrier birds orcharacter skins. While most people avoid spending much money, this results in a small share ofheavy users spending thousands of dollarsin an otherwise free game.
This “free-to-play” model is so profitable that it’sgrown increasingly popularwith video game designers and publishers.
Similarly, subscription-based “massively multiplayer online roleplaying games” such asFinal Fantasy XIVuse core game play loops. These are the primary set of actions a player will carry out during a game – such as jumping inSuper Mario Brothersorcontinuously upgrading weaponsin the Borderlands series – that encourage constant play to keep users playing and paying. They’re so effective that, for a small number of people, playing the game can even become anaddictionthat interferes with their mental well-being.
Gamification, however, goes one step further and uses gaming elements to influence real-world behavior.
Gamification for good
Gamification is the use of gamelike elements inother contexts.Common elementsinclude badges, points, rankings and progress bars that visually encourage players to achieve goals.
Many readers likely have experienced this type of gamification to improvepersonal fitness, get bettergrades,build savings accountsand evensolve major scientific problems. Some initiatives also include offering rewards that can be cashed in for participating inactual civic projects, such as volunteering in a park, commenting on a piece of legislation or visiting a government website.
They all rely on the behavioral concept known asextrinsic motivation, which occurs when a person pursues goals with the expectation of a reward, such as a student who hates calculus but desperately needs an A to graduate. Extrinsic motivation lasts only as long as the player feels appropriately challenged and rewarded. Games exploit this by tapping into thepleasure of earning rewards.
Gamification for bad
There’s a fine line, though, between using extrinsic motivation to help people lose some weight and using it to obscure the complexity of investing in stocks and other financial instruments behind a fun, gamelike environment.
Robinhood built its app todelight people who are new to active investing, taking advantage of the same psychological motivators that drive game behavior. Robinhood’s simple interface is replete withemojis, push notifications, digital confetti and backslapping affirmation emails. Its “game play loop” is making stocktradingeasy while providing sensory feedback.
I opened an account to see for myself.
The gamelike thrills start at sign-up when Robinhood offers new users a free stock, which they select from three face-down golden cards. This gives a casinolike illusion of choice, with thecolor goldlending an air of sophistication.
But rather than merely pick a card, users actually “scratch” it, like a lottery ticket, after which the stock is revealed with affirming congratulations and a screen full of confetti. Other sensory appeals such as colors and gamified imagery such as gift boxes encourage continued use.
By delighting users, Robinhood creates players rather than investors. This helps them overlook the fact that speculative investing isvery difficultand could cause them to lose lots of money – even if they’re professionals who spend hours and daysscrutinizing companies and trades.
Robinhood isn’t the only financial app that uses some of these gamelike effects. But unlike Robinhood, apps likeAcornsand theLong Gameencourage users to save money rather than spend it.
Games make learning fun
In my own workstudying player interaction and decision-making in games, I’ve largely found them to be positive psychological tools.
And there are lots of real-world applications of game play, such as for improving health, furthering education and saving money. But I believe simply encouraging people with little investing experience to buy and sell stocks is not one of them.
As Robinhood prepares to go public, it could use the opportunity to rethink how it interacts with users. Rather than celebrating a trade, for example, it could reward them for taking an investment education program.
As any good game maker knows, the best games not only arebig on fun and socializing but emphasize learning too.
This article byJames “Pigeon” Fielder, Adjunct Professor of Political Science,Colorado State Universityis republished fromThe Conversationunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
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