Perfecting Metaverse Design: Behavioral Economics and Gamification

Perfecting Metaverse Design: Behavioral Economics and Gamification

Octalysis Gamification

The world has become an echo chamber of the words virtual reality, metaverse, and crypto. Now, many companies are jumping on the bandwagon… but will all of them succeed? Not unless they acquaint themselves with the mysteries of the human mind and how humans make decisions. Enter behavioral economics and Gamification.

On its own, the metaverse might be merely decorative. Like a cool and shiny ornament that draws you in and leads you to admire it from all angles. But this fascination becomes short-lived once you realize that there is no daily engaging journey that pulls you back to the Metaverse again and again. Most of it is just building digital shops, mining gems and selling land.
You remember how Second Life died and you shrug and walk away…

But what if this ornament was designed in a way that gives people everyday what humans desire? Then surely, you’d be hooked. Because it’s one thing to attract customers, but it’s another to retain them. So, if you want to design a good metaverse, you’ll need to be versed in Octalysis gamification, which leverages key behavioral economics principles.

Behavioral Economics: The Fast vs Slow Brain

Which is more predictable? Rational behavior or irrational behavior? Most people guess it is only the former – no doubt a “rational” guess. However, most people are wrong. And that’s kind of the point of where we’re going with this.

After all, rational behavior is inherently logical and, therefore, aligns with common sense. But countless behavioral economics studies cite that irrational behavior is extremely common and is also predictable. Daniel Kahneman, Nobel Prize winner for his work in economics, explains why humans are irrational in his book “Thinking, Fast and Slow”. He describes our brains as having two systems: System 1 and System 2.

System 1 is our primitive, instinctual brain that’s focused on our survival. It’s the part that “thinks fast”. That’s why it’s largely responsible for our involuntary, automatic, and intuitive responses. It’s the part of the brain that causes you to blink before you consciously register that a small object was about to fly in your eye. It’s also the part that helps you do simple math, read easy sentences, and categorize objects.

System 2 is the slow-thinking part of our brain that requires attention and deliberation. It’s the part that tells us to put down that third beer or fourth slice of pie. It’s also the part that helps with reasoning, concentrating, and problem solving. Because System 2 clearly requires more effort and is “no fun” (who doesn’t want a fourth slice of pie?), our brains tend to get lazy and rely on System 1.

That’s why gamification focuses on human motivation. Because that which naturally motivates our decisions is governed by System 1. When you spot a tarantula, do you hem and haw about whether your fear is warranted? Or do you just get the heck out of there? If you’re at a party and you notice that there’s only one slice of pizza left, would you not be more tempted to eat it, regardless of whether you were hungry? If you feel connected to someone, do you analyse why you feel connected before you smile and warm to that person?

Effective metaverse design understands that, if you want to keep your users hooked, you’ll need to create a virtual world that accesses our primitive, instinctual brains. When you elicit automatic responses, not only is it less taxing to perform an action, but this “cognitive ease” makes the action more pleasant.

Behavioral Economics: Psychological Priming and Cognitive Ease

Knowing the difference between the two brain systems is important. System 1 has more power over us because it’s harder, if even possible, to control – it’s automatic. However, we have to consciously engage System 2, the part responsible for effortful mental activity. As a result, System 2 is often left by the wayside.

That’s why people are more likely to make irrational decisions. Because the “fast” brain (System 1) is fraught with errors, biases, and is easily influenced by our environments. Not to mention, it comprises 80% of who we are. Whereas the “slow” brain (System 2) – which is only 20% of who we are – deliberately works to overcome these errors, biases, and influences (i.e., it’s rational).

There’s a couple of ways that the fast brain influences our behavior. These concepts are born out of both psychology and behavioral economics:

  • Psychological priming; and
  • Cognitive ease.

Psychological priming is also known as emotional association. That is, we make connections between one or more objects or concepts, by imposing our perception of the first object onto the subsequent one(s). The interesting part is that it all occurs subliminally. You might not have even consciously registered the first object.

For example, there was an experiment where two groups of subjects were asked to play a negotiation game inside a room. The only difference is that when group 2 was up, the experimenters added a monitor inside with a floating dollar sign on the screensaver. The result was that group 2 ended up negotiating much more aggressively than group 1. It’s like the concept of money, and the strong desire we have for it, manifested in their negotiation tactics as a strong desire to win. Interestingly enough, when experimenters asked if the dollar sign influenced their negotiation tactics, most of the group 2 subjects didn’t even notice there was a monitor, much less the dollar sign.

In other words, the dollar sign subliminally and psychologically “primed” them to negotiate faster.

Then there’s cognitive ease. First off, the whole reason we naturally favor the fast brain is due to cognitive ease. As mentioned, that which occurs involuntarily requires less of a cognitive load than that which is deliberate, conscious, or planned. But it also has to do with exposure.
For example, the brain is always scanning for threats. That is why we tend to be on high alert in new situations and environments. But when it’s a familiar situation/environment, the mind can relax because it is predictable, which creates an erroneous bias of likability.

That is why we are constantly being bombarded with advertisements. It is just like developing a relationship with a new person; the more exposure we get to certain brands and products, the more we like and trust them, which creates brand loyalty. Let’s say that you love Kellogg’s Cornflakes. There is nothing particularly unique about this cereal. There are a ton of “knock-offs” that cost less and taste just as good, if not better. But they just can’t afford the same advertising/exposure. So they become elusive and “scary” to consumers. Because the fast brain will say “stick with what you know”. Even if you have never tasted Kellogg’s Cornflakes before, the constant advertisements would create enough familiarity to seem like a safer bet.

Do you love doing things that you are bad at? Is it a coincidence that English-lovers tend to be good at English? Or that math-lovers tend to be good at math? The likely answer to all these questions is “no”, with the common denominator being “cognitive ease”.

This final example cuts across both priming and cognitive ease. Imagine you are walking on the sidewalk. There is a bus stop with a giant advertisement of a McDonald’s burger. Normally, you don’t eat McDonalds. But hours later, when you are hungry, you decide to get a Big Mac without even remembering the bus stop. That is both priming and cognitive ease in action at once. Not only were you primed to associate your hunger with McDonald’s, but the advertisement made McDonald’s feel more familiar and thus likable (cognitive ease).

When designing your metaverse, you can definitely take advantage of these two behavioral economics concepts (priming and cognitive ease). But the idea is to be more immersive and less invasive/intercepting. The idea is for companies to learn the life, language, and lingo of the metaverse. The more you immerse yourself within the culture, the easier it’ll be to empower, reward, build relationships and collaborate with consumers, which will ultimately provide them with more value.

So don’t just bombard them with advertisements and prime them with stimuli at every corner. Distinguish your brand via an original virtual world with meaningful narratives (Core Drive 1) and characters. That way, you’ll be able to place everything into context, especially when repeatedly exposing them to your brand to elicit cognitive ease, or priming users with stimuli to elicit future responses.

Gamification: Leveraging Irrational Behavior in Your Metaverse

In general, the dominant aspect of our identities and decisions is almost given to us by the fast brain; it is innate. What we think we want comes from the slow brain – by far the smallest aspect of our behavior and decisions. That’s why our identities can be split into two parts:

Who we are (System 1); and
Who we want to be (System 2).

Point is, in order to get people to go somewhere or do something without any obvious reason – like returning to your metaverse over and over again – it’s best to appeal to our irrational, fast brains. After all, 80% of our decisions are dominated by our innate natures (System 1), rather than who we want to be or the face we show the world (System 2).

Enter the art of gamification, the vehicle through which we can access the fast brain. Since people are both extrinsically and intrinsically motivated to play games, then we can apply game mechanics to the metaverse to elicit the same degree of motivation and user engagement.

When it comes to behavioral economics and gamification, there are a number of key concepts at play. Let’s highlight three of them:

The endowment effect;
The scarcity effect; and
The cost of zero cost.

Not only do the above 3 concepts inherently relate to each other, but they corroborate Octalysis’ 8 core drives of gamification.

The endowment effect is one example of our irrational decision-making. Because we’re naturally motivated to own and possess things (Core Drive 4), we tend to value things more just because we own them. Yet, this stands in stark contrast to the scarcity effect (Core Drive 6), where we tend to place more value on what other people have, or things that are (or that we perceive are) rare or harder to obtain.

Let’s say a wealthy father has many assets. He drafts a will for his two sons and believes he’s divided up his money and assets fairly. But when he presents the will to them, both sons balk and complain that the other has more. This is the scarcity effect at play. Regardless of the actual rarity or attainability of what the other brother is inheriting, it appears to have more value simply because it is not theirs.

Now, to solve the issue, he asks both sons if they are sure the other brother got the better deal; and they both say yes. So when he asks them to switch, you would think that they would be happy. Yet, all of a sudden, they both changed their tune. They didn’t want to give up what they owned.

There is a whole lot of fast-brain irrationality going on here. First, it is irrational to overvalue something simply because it is yours. Second, it is irrational to overvalue something simply because it is someone else’s/seemingly unattainable. And third, it is irrational to assume that two contradictory concepts can both be true at the same time (the endowment and scarcity effect). That notwithstanding, everything can be rationalized by Core Drive 8 – Loss & Avoidance. In short, people want what they don’t have, as long as they don’t lose what they already have.

The good news is that you can infuse these Octalysis gamification core drives within your metaverse design. For example, it is one thing to include opportunities for your metaverse users to gain crypto. But they won’t value it anywhere near as much unless there are certain contexts in which they stand to lose it. To enhance this scarcity effect, there also needs to be other characters or users that they can collaborate with, compete with and compare themselves to (Core Drive 5). After all, how can something be truly scarce or coveted without a social aspect? The social aspect deepens the scarcity (just as meaning does with NFTs like Metablox)

The last behavioral economics principle is the cost of zero cost – a witty way of saying that people will practically do anything for free, even if the paid alternative is better or more suitable. For example, you might be a coffee lover who is more than capable of affording an $8 cup of coffee. But because the mall was giving away free instant coffee, you went the free route.

This “cost of zero cost” principle is also contradictory. Since people can go one of two ways when presented with something free:

They will either fall over their feet for it because free things are scarce (Core Drive 6); or
They won’t care at all about it because its high attainability doesn’t breed a sense of accomplishment (Core Drive 2).

Fortunately, you can appeal to both personality types in your metaverse by being unpredictable (Core Drive 7). That way, not only can you appeal to the people who pipe up at freebies. But for the second personality type that takes freebies for granted, they will always be curious (Core Drive 7) about the next “giveaway”.

Don’t get left behind!

Despite how irrational human behavior, and thus our decision-making can be, we can understand and predict how certain contexts elicit certain behaviors. Businesses that don’t appreciate its relevance to their metaverse endeavors will struggle with user engagement and retention.

Our Octalysis Framework is time-tested and internationally acclaimed! Backed by behavioral economics, our 8 core drives of gamification deep-dive into the machinery of the human mind to produce unparalleled results in user engagement and retention.

So, are you looking for a quick turnaround of positive results? Then contact us now to find out how you can maximize user engagement and retention!



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