Robinhood gamification makes trading fun and exciting – what could go wrong?

Wall Street has long been likened to a casino. Robinhood, an investing app that just filed plans for an initial public offering, makes the comparison more relevant than ever.

That’s because the power of the casino is in how it makes people feel like playing their money is a game. Casinos are full of mood lighting, fun noises and other sensory details that reward players when placing coins in slot machines.

Likewise, Robinhood’s sleek and easy-to-use app feels like an exciting video game rather than a sober investment tool. The red and green color scheme is associated with mood, with green having a calming effect and red increasing excitement, anger and negative emotions. Picking stocks can be like a fun lottery of scratching the winning ticket; festive confetti falls from the top of the screen for the first three new user investments.

But just as people can lose a lot of money gambling in the casino, the same can happen when trading stocks and bonds – sometimes with disastrous consequences, like last year when a Robinhood user commits suicide after mistakenly believing he lost US$750,000.

I study how people behave in game worlds and design games in the classroom. Using game-like features to influence real-life actions can be beneficial, for example when a health app uses rewards and leaderboards to encourage people to move more or eat healthier foods. But there is also a dark side, and so-called gamification can cause people to forget the real consequences of their decisions.

The games explained

Generally speaking, games – whether played on a board, between children or with a computer – are voluntary activities, structured by rules and putting players in competition to take up challenges without risk outside their virtual world.

The reason games are so engaging is that they challenge the mind to learn new things and are generally safe spaces to face and overcome failure.

The games also mimic rites of passage similar to religious rituals and take players into highly focused “flow states” that dramatically alter self-awareness. This sensory mix of fluidity and mastery is what makes games fun and sometimes addictive: the thought of “just one more turn” can go on for hours and players forget to eat and sleep. Gamers who barely remember yesterday’s breakfast remember visceral details from games played decades ago.

Unlike static board games, video games specifically provide visual and auditory feedback, rewarding players with colors, movements, and sounds to maintain engagement.

The power of the angrier birds

The psychological impact of gambling can also be exploited for profit.

For example, many free-to-play video games like Angry Birds 2 and Fortnite give players the option to spend real money on in-game items like birds or new and even angrier character skins. While most people avoid spending big bucks, this translates to a small share of heavy users spending thousands of dollars on an otherwise free game.

This “free-to-play” model is so profitable that it is increasingly popular with designers and publishers of video games.

Similarly, subscription-based “massively multiplayer online role-playing games” such as Final Fantasy XIV use basic game loops. These are the primary set of actions a player will perform during a game – like jumping in Super Mario Brothers or continually upgrading weapons in the Borderlands series – that encourage constant play to keep users playing and paying. . They are so effective that for a small number of people, playing the game can even become an addiction that interferes with their mental well-being.

Gamification, however, goes one step further and uses game elements to influence behavior in the real world.

Frequent jumping is a key part of the Super Mario Brothers experience.

Gamification for good

Gamification is the use of game-like elements in other contexts. Common elements include badges, points, leaderboards, and progress bars that visually encourage players to achieve their goals.

Many readers have probably experimented with this type of gamification to improve their personal fitness, get better grades, create savings accounts, and even solve major scientific problems. Some initiatives also include offering rewards that can be cashed in for participating in genuine civic projects, such as volunteering in a park, commenting on a piece of legislation, or visiting a government website.

They are all based on the behavioral concept known as extrinsic motivation, which occurs when a person pursues goals in expectation of a reward, such as a student who hates math but desperately needs an A. to get his degree. Extrinsic motivation only lasts as long as the player feels appropriately stimulated and rewarded. Games exploit this by tapping into the fun of earning rewards.

gamification for evil

There is, however, a fine line between using extrinsic motivation to help people lose weight and using it to hide the complexity of investing in stocks and other financial instruments behind a fun and playful environment. .

Robinhood has designed its app to delight people new to active investing, by tapping into the same psychological motivations that drive gambling behavior. Robinhood’s simple interface is full of emojis, push notifications, digital confetti and affirmation emails. His “game loop” takes stock trade easy while providing sensory feedback.

I opened an account to see for myself.

The thrill of the game begins upon registration when Robinhood offers new users free stock, which they select from three face-down golden cards. This gives a casino-like illusion of choice, with the color gold giving an air of sophistication.

But rather than simply choosing a card, users actually “scratch” it, like a lottery ticket, after which the stock is revealed with affirmative congratulations and a screen full of confetti. Other sensory appeals such as playful colors and images such as gift boxes encourage continued use.

Gift imagery in the Robinhood app taps into the extrinsic promise of a reward for sender and receiver.
Robinhood App

By delighting users, Robinhood creates players rather than investors. It helps them to forget the fact that speculative investing is very difficult and can cause them to lose a lot of money, even if they are professionals who spend hours and days scrutinizing companies and trades.

Robinhood isn’t the only financial app that uses some of these game effects. But unlike Robinhood, apps like Acorns and Long Game encourage users to save money rather than spend it.

Games make learning fun

In my own work studying player interaction and decision-making in games, I have widely found these to be positive psychological tools.

And there are many real applications of the game, such as improving health, furthering education, and saving money. But I think just encouraging people with little investment experience to buy and sell stocks is not one of them.

As Robinhood prepares to go public, it could take the opportunity to rethink the way it interacts with users. Rather than celebrating a trade, for example, it could reward them for completing an investment education program.

As any good game maker knows, the best games are not only fun and social, but also focus on learning.

This article by James “Pigeon” Fielder, Adjunct Professor of Political Science, Colorado State University, is republished from The Conversation under a Creative Commons license. Read the original article.

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