A deep dive into variable rewards

8 minute read

This is a continuation of my previous post on variable rewards here.

In our earlier post, we had discovered that variable rewards are a key ingredient in most of the habit forming products.

Generally we tend to equate rewards with money. But however we found from our earlier examples that there are other rewards such as information, social approval etc which can be used to create habits.

So this begets the question:

What are the “rewards”  which when varied can lead to habit formation?

According to the behavior design expert, Nir Eyal, variable rewards come in three types and involve the persistent pursuit of:

  1. Rewards of the tribe 
  2. Rewards of the hunt 
  3. Rewards of the self

Image result

What the F*%&??

I completely get it. But please hang on. I promise to simplify and will be well worth your time.

1.Rewards of the Tribe (read as social rewards)

Cut the crap version: People deep down want to feel connected to others

Image result

All of us are social creatures. We crave for a sense of belonging, attention, approval and appreciation from others.

“We are social beasts and still judge one another on a daily basis”
– Rust Cohle ( a fictional character in the television series True Detective)

This can be explained by our evolutionary roots. Throughout our long history, communities were our lifelines. It was extremely difficult to survive the harsh weather conditions and the constant hunt for food as an isolated individual or family.So as a part of evolution, the need for being a part of community became ingrained in us.

In fact scientists have found out that humans have specially adapted neurons in their brain (called mirror neurons) that help us feel what others feel, providing evidence that we survive through our empathy for others.

Thus our brains typically crave for rewards that make us feel accepted, attractive, important and included in a community.

In a nutshell, it is about social rewards

A few examples:

Facebook, Twitter, Linkedin, Instagram and several other social media apps:
They collectively provide powerful social rewards on a variable basis to billions of people around the world. With every post, tweet, share or comment, users anticipate social validation. Rewards of the tribe keep users coming back and wanting more.

Image result

2.Rewards of the hunt: 

Cut the crap version: We love to search for resources (money, food, information, deals  etc)

We are excited by the thrill of the hunt.

Hunt  for  variable  material  rewards

What several centuries back used to be a hunt for food, animals, shelter has now translated into a hunt for things like money, fancy objects, information and deals.

Image resultImage result for casino slot machineImage result

Some examples,

  • Hunt for money — think slot machines
  • Hunt for deals — The Great Indian Sale on Amazon, discount sales in retail stores
  • Hunt for information — scrolling across your twitter feed, google search etc


3.Rewards of the self

Cut the crap version : We pursue self-achievement

Image resultImage result for rubik cube

These are rewards that satisfy our intrinsic need for personal excellence and a sense of competence. Basically our brains are always on the look out for new challenges to overcome. The more success we have, the happier we are.

Some examples,

  1. Video games
  2. Playing a sport

In fact there is a new concept called Gamification which involves applying game mechanics and game design techniques to engage and motivate people to achieve their goals. This is extensively used in most of the apps.

 “In every job that must be done there is an element of fun.
   Find the fun and snap!
   The job’s a game.”
                                              – Mary Poppins, the 1964 American musical fantasy comedy film

Summary:

Most of the habit forming apps combine the three types of variable rewards, thereby increasing their effectiveness in creating user habits.

As I had mentioned earlier, there are few other steps which the app designers combine along with variable rewards to get the habit formation in place. I will talk about that in my next post.

PS:

If you like the content, it would be awesome if you could drop in your comments and also consider subscribing to the blog (all posts shall be delivered directly to your inbox), because your valuable comments and subscription are my variable rewards 🙂 

If you have survived me till here, thanks a ton for reading and happy investing.

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Author: Arun

Hey! I'm Arun and I work for the research team of a boutique wealth management firm based out of Chennai. The idea behind this space is to share my learnings/mistakes and hopefully help people in making better investment decisions :)

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