Literature Review: Distinguishing Behavioral Design and Gamification

Sophia Campione | September 2023

Behavioral Design and Gamification are two distinct strategies employed in digital experiences to influence behavior change and engagement. While they share common elements, such as leveraging psychology and behavioral principles, they serve different purposes and have unique approaches. Behavioral Design focuses on creating lasting, ethical behavior change by deeply understanding human behavior, fostering transparency, and promoting mutual responsibility. In contrast, Gamification uses game-design elements to drive engagement and achieve specific business objectives. This paper provides a comprehensive overview of these strategies, highlighting their differences, techniques, implications for business strategy, and ethical considerations. Understanding these distinctions is crucial for designers and businesses seeking to create effective and ethical solutions in the realm of behavior change.

Introduction

Behavioral Design and Gamification have become increasingly prominent strategies within the past decade, particularly in digital experiences, for influencing behavior change to facilitate reaching goals and create engaging experiences. However, these strategies are often conflated. Behavioral Design is a problem-solving approach that leverages psychology and behavioral economics to understand human behavior, interaction, and decision-making to design interventions that foster positive, lasting behavior change ("Behavioral Design" Irrational Labs). Gamification applies game-design elements in other contexts to maximize human motivation and, at its core, drive engagement for business objectives (Chou 2021; “Gamification and behavioral design” 2022; “What is gamification?) . This paper aims to clarify their differences, focusing on what they are, how they're used, and why they matter to businesses and product/service designers.

Overview: Behavioral Design

Behavioral Design combines psychology and behavioral economics with design and technology to transform our understanding of human behavior into solutions that foster sustainable and beneficial behavior change and promote social benefit (King, et al 2014; “Behavioral Design”). In contrast to classical economics, which assumes people always make rational decisions based on logic and self-interest (Homo economicus), behavioral economists have mapped out irrationalities that influence decision-making, providing a more nuanced understanding of how people– Homo sapiens– make choices in the real world (“Homo economicus”). It's important to note this shift in thinking because many organizations still operate under the assumption that people fully understand and can predict their preferences, and that these preferences outweigh the irrational motivations present in our environment (“Behavioral Design”).  For example, an individual is trying to save money but gets influenced to spend money through targeted advertising or the power of social influence and the all-to-common phrase “everyone else is doing it” to justify an action. 

Behavioral design aims to nudge individuals towards specific actions or decisions without coercion, respecting and augmenting their intrinsic goals and their rights to freedom of choice, autonomy, and dignity. This strategy relies on the understanding that our habits are learned and unconsciously performed behaviors. It uses various models to change and teach new behaviors or stop behaviors (Kong 2018). For instance, The Fogg Behavior Model (FBM) emphasizes the simultaneous need of sufficient motivation, ability, and an effective trigger for a behavior to occur (Fogg 2009). Thus, behavioral design focuses on enhancing motivation and ability (simplicity) and effectively timing triggers to elicit behavior, or conversely, on diminishing these factors to inhibit it. In practice, this involves first diagnosing the target behavior and outlining the required steps to achieve it. Subsequently, factors like biases, barriers, and benefits that affect people along those steps are mapped out, facilitating the ideation and creation of solutions to make the behavior more or less likely, such as removing a barrier or adding a benefit (“Behavioral Design”). As Thaler and Sunstein stated in “Nudge: The Final Edition”: “Often we can do more to facilitate good behavior by removing some small obstacle than by trying to shove people in a certain direction,” and when adding a benefit “the most important modification that must be made to the standard analysis of incentives is salience.” These solutions are then tested through controlled experiments to gauge their effectiveness (“Behavioral Design”). 

To demonstrate, consider the evolution of 401(k) plans (Appendix A). Despite the well-documented upside (increasing motivation) to managing these portable, customizable plans, employees initially struggled with enrollment uptake, contribution increases, and improving investment return.The initial enrollment process was complex, with enrollment forms, manual contribution calculation, and determining asset allocation all creating  barriers to entry (inhibiting ability). To remove obstacles, the enrollment process was automated. Now, when an individual is eligible, they are automatically enrolled by their employer at a default savings rate and fund allocation. An example within legislation on this process unintentionally created an anchor for the default savings rate– three percent– that inhibited contribution increases. “Save More Tomorrow” was an ideated, and highly effective, choice-architecture solution that paired contribution increases with pay raises. Today, the typical default used by many is six percent with automatic escalation, starting at three percent and annually increasing until a maximum. Two solutions have aided investment return improvements, one of which was the government creating investment alternatives. The default is now commonly a balanced fund, the most popular being the target-date plan– an individual sets a retirement date and the plan automatically adjusts as the date  approaches. In all, the iterated solutions removed barriers to entry, such as cognitive load, and created an effective trigger, automatic enrollment, to make saving for retirement easier and almost mindless (Thaler and Sunstein 2021).

Overview: Gamification

Gamification capitalizes on the predictive irrationality of human behavior– feelings, insecurities, reasons for doing or not doing something– to optimize feelings, motivations, and commitments, with the aim of inducing desired behaviors in target individuals, measuring any changes along the way (Chou 2021; Pong et al 2022; “Get Results- Change Behavior and Focus Attention with Gamification”). The strategy is employed by organizations to move business process interfaces into a behavior-based feedback loop and when effectively implemented, the goal-oriented technique can lead to enhanced engagement and, ultimately, business performance (“Get Results…”). Predictive irrationality (Appendix B) explains the often systematic and predictable nature of human behavior, challenging classical utility theories (“Predictably Irrational”). It recognizes the bounded rationality humans often operate within and how this impacts their decision-making (“Bounded Rationality”). For instance, the Allias Paradox illustrates the inconsistency of an individual’s response when faced with quick choices or immediate decisions  ("Who Was Maurice Allais?"). Similarly, Prospect Theory illustrates how humans assess the value of potential gains or losses in decisions involving risk and probability (“Allias Paradox”). Understanding these influences fosters predictability that businesses capitalize on for their benefit (“Predictably Irrational”).     

Gamification works because it exploits how our brains are wired– it essentially tricks us into habit-formation through gameplay or convinces our brain that habit formation is more pleasant this way. This strategy can be a powerful way to create habits due to its ability to decrease cognitive load required to make decisions, but we often fail to realize that gamification techniques, such as streaks or tasks, create micro-stress within our brain that adds up over time (Markov 2020; Pong et al 2022). While we love the thrill of rewards, we despise the feeling of missing out on them, this phenomenon is known as loss aversion (Markov 2020). Gamification effectively operates by employing a variable reward system within a straightforward engagement loop (simple action → simple reward → anticipation → expansion) that secures user "investment," fostering dedication and reducing the likelihood of user disengagement, while also employing a significant engagement loop (major action→ major reward) that keeps users engaged and feeling productive in progressing toward goals, whether large or small, regardless of time spent on the product (Yang 2020).  

Consider Duolingo (Appendix C), a highly successful language learning platform with 16.3 million active users and over half a billion dollars in revenue in 2022 (Clinehens 2023). Duolingo's effectiveness in engaging users stems from its application of the habit loop model, comprising triggers, routines, and rewards. Triggers initiate the language-learning routine, with Duolingo employing various strategies like push notifications, for which users are rewarded when they opt in, and emails that can at times be emotionally manipulative when engagement decreases (Clinehens 2023). During the routine, Duolingo employs tactics such as pre-commitment, where users set goals prior to their first lesson; social motivation, through leaderboards and statistics; goal gradient theory, breaking down language into smaller, achievable milestones; personalization via an avatar that evolves as users continue using the app; and streaks to enhance the language-learning experience (Clinehens 2023). Users are further incentivized through continuous rewards like points after each completed activity, variable rewards such as XP boosts and chests, and achievement badges (Clinehens 2023). Duolingo's adept use of gamification is evident in users maintaining streaks for over a decade (Matt 2023). However, it's worth noting that some critics question its efficacy in teaching languages, citing the absence of grammar explanations and contextual sentences, as well as the perception of stress in the learning process (Missal 2021).

The fundamental principle used by experience designers to accomplish gamification is through game-design elements, such as points, achievements, leaderboards, progress visualizations, or community interaction, badges, and tasks (“Gamification and behavioral design” 2022; Pong et al 2022). Gamification done well aligns the interests and intrinsic motivations of users and amplifies them through mechanisms and rewards to drive engagement, loyalty, retention, and therefore business objectives (Cunningham and Zichermann 2011). These mechanics tap into human desire for learning, social interaction, competition, achievement, status, expression, among others (Yang 2020). However, this reward structure is often where negative impact enters the system. Furthermore, poor feedback systems can leave users feeling manipulated, therefore providing clear feedback measures, such as real time updates, progress status, and rewards,  that allow users to feel in control of their actions and performance is critical for success (“Get Results - Change Behavior and Focus Attention with Gamification”). It’s crucial to note that poorly executed gamification, or malintentions, can result in dark patterns – deceptive and manipulative interfaces that exploit psychology, such as information framing wherein equivalent information can appear more or less attractive due to what features are highlighted, to manipulate and encourage actions or decisions against a user’s best interests (Craig; Groenewegen; “Framing effect”).

Behavioral Design vs Gamification: Key differences

Note: Because behavioral design and gamification leverage similar psychological and behavioral economics principles, they can both create negative impacts upon individuals due to mal-intentions of the implementers. Careful, thoughtful utilizations of these strategies is necessary to mitigate risks on the target individuals. Gamification can be leveraged in behavioral design, but not all gamification is behavioral design.

Key Differences at a Glance

The simplest distinction between these behavior change strategies is why they are used and the outcome they aim to achieve. Behavioral design aims to create lasting and beneficial behavior changes in individuals informed by comprehensive insights into individual behavior, the relevant system, and the decision-making process (“Behavioral Design”). Effective interventions are ethically-aligned with transparency, social good, and users’ desires. Operational transparency provides users insight into the scientific research incorporated into the design, which can build trust and encourages process compliance, fostering a sense of mutual responsibility for putting in equal effort (Pong et al 2022). 

Gamification, however, primarily focuses on enhancing engagement to influence behavior change and meet business goals (“What is Gamification?). This emphasis on engagement can at times lead to rushed implementations that fail to effectively produce the desired results. Additionally, the heavy reliance on extrinsic motivators to stimulate this engagement poses risks of unintended negative consequences for individuals or rendering the gamified approach ineffective if not thoughtfully and strategically applied (Cunningham and Zichermann 2011; Yang 2020) . Unlike behavioral design, which deeply considers psychological and intrinsic aspects, gamification prioritizes the immediate appeal and gratification of the game-like elements within the design, potentially sacrificing long-term sustainability and engagement (Chou 2021). 

While both strategies can both positively and negatively influence habit formation and utilize behavioral principles to do so, the techniques to do so differ. Key differentiators of behavioral design include the reliance on behavior models to comprehend and create interventions that manipulate motivation (incentivize or diminish), ability (simplify or complicate), and trigger (establish or remove) to nudge individuals in the intended direction while preserving their autonomy (Fogg 2009; “Behavioral Design”). On the other hand, gamification primarily uses external cues, such as rewards, to induce a behavior, mainly engagement, that’s optimal for meeting business objectives (“What is Gamification?). It’s important to distinguish incentives and rewards. Incentives activate the brain’s critical thinking machinery (which is responsible for rational decision-making) through future consequences for an action performed today. A reward, however, activates the brain’s habit system through immediate positive consequences from an action (Kong 2018). Incorporating immediate rewards can enhance motivation for desired actions and prove valuable when aligned with individuals' intentions; however, it becomes predatory when used to influence actions that diverge from their long-term goals (“Behavioral Design). 

In conclusion, the distinction between behavioral design and gamification lies in their fundamental purposes and intended outcomes. Behavioral design aims to create lasting behavior change, rooted in a deep understanding of the individual and system dynamics, while prioritizing ethical alignment, transparency, and social good. In contrast, gamification primarily focuses on boosting engagement to drive behavior change and meet business goals. While effective, gamification’s emphasis on immediate and extrinsic rewards can at times result in rushed, ineffective implementations that can lead to unintended consequences. Furthermore, behavioral design leverages behavior models to design interventions that can manipulate motivation, ability, and triggers while maintaining individual autonomy, whereas gamification primarily leverages external cues, such as rewards, to induce desired behaviors. 

Behavioral Design vs Gamification: Implications for Business Strategy

Note: Empirical research on the effects of these two strategies on business strategy and perception is limited. 

Behavioral design and gamification differ in their roles within business strategy and their design. Strategic management principles commonly rely on competitive advantage, which Anthony E. Henry describes as “the configuration of an organization’s activities which enable it to meet consumer needs better than its rivals.” This requires first understanding what those needs are– a product/service is only as successful as its ability to change or harness human behavior. Behavioral design’s core purpose is to understand the target audience and select the right behavior based on this understanding (Hrera,“Behavioral Strategy: An Overview”; “Behavioral Design: An Overview”). Oftentimes, a product/service is pitching its benefits/value to influence customers, but behavioral design flips the process to center on the human and understand what they need to be successful (Groenewegen, “What is Behavioral Design?”). Successful strategies solve problems for both the audience and the business, emphasizing the importance for understanding audience pain-points. This  rigorous process involves six key steps and ensures behavior-market fit– a prerequisite for product-market fit: 1) define the goal, 2) define the audience, 3) behavioral research that includes a situational survey, behavioral audit, and worldview analysis, 4) behavior matching, which needs to be a legitimate problem and fit into the audience’s situation, behavioral repertoire, and worldview, 5) behavioral innovation, and 6) product design and development to create a product or service that enables ease, delight, and problem mitigation (Hrera,“Behavioral Strategy: An Overview”). As Seth Godin put it: “Don’t find customers for your products, find products for your customers,”(Pakulyte 2019). In contrast, gamification utilizes audience understanding to optimize behavior that meets business goals, focusing on metrics to inform desired behavior changes and the mechanics used to achieve them. Defining metrics is pivotal for leadership confidence in the initiative (“Get Results - Change Behavior and Focus Attention with Gamification”). The subtle difference in process accentuates the difference between the strategies: behavioral design is a behavior-led approach to create solutions, whereas gamification is a tool employed to shift behavior in a way that progresses business metrics. 

To illustrate the differences between the two approaches within business strategy, let's examine how businesses respond to inflation. Organizational response to inflation will make or break customer relationships, such as businesses exploiting inflation as an opportunity to raise prices when customers are already financially strained, or resorting to price cuts and discounts as a short-term engagement–ultimately, retention– strategy. 

However, Neptune, a British furniture company, has employed behavioral and empathetic design to mitigate the psychological effects of inflation. Neptune transparently explains product pricing on their website, aligning it with core brand values, enabling trust-building with customers, to acknowledge the psychological impacts of inflation and minimize its impact. This strategy leverages the noble edge effect, which describes how emphasizing openness, honesty, empathy, and the public's best interest leads to increased respect and profits. Prioritizing value-based solutions through empathic design is essential during hard times. This approach centers customer well-being and combines brand promise (providing authentic value and nurturing trust), empathy (understanding consumer perspectives), and action (inspiring and motivating consumers to partake in doable and self-beneficial action) (Pilat 2022; “The Noble Edge Effect”).  In contrast, IKEA and Walmart have enhanced their loyalty programs through additional benefits like five percent off eligible purchases or cashback rewards (Deczynski 2022). Although these gamified efforts aim to retain customers despite rising prices and can positively impact brand loyalty and engagement, the frequently-employed extrinsic rewards can demotivate individuals driven by intrinsic motivation and leave them feeling coerced. These unintended externalities create an ethical responsibility upon the implementer (Panosian 2023; Sheetal et al 2022) . Loyalty is a mutual investment, not an exchange. Conflating loyalty with retention, promotion, and rewards can harm brand equity more than it fosters sustainable loyalty. Because loyalty is as much about ethics as it is business, it should never be reduced to a data-driven gimmick for customer acquisition and market share (Schrage 2015). 

Conclusion

Behavioral design and gamification offer distinct business strategies for influencing behavior change in the design and development of products and services. Behavioral design aims to create ethical, positive, and sustainable behavior change solutions that are deeply rooted in psychology and behavioral economics and fosters transparency, trust, and mutual responsibility. Within business strategy, the approach centers on customer understanding and their needs, allowing this understanding to guide product/service development so the solution is problem-solving for both the audience and organization. Gamification employs game-design elements to enhance engagement via extrinsic motivators, aiming for behavior change to meet business goals. This strategy predominantly utilizes audience insights to optimize behavior aligned with specific business objectives, often relying on metrics to guide and measure the desired behavioral changes in the overall business strategy. These two approaches, while different in their methods, both play pivotal roles in shaping how individuals interact with and respond to digital experiences and interventions. Understanding their unique characteristics and applications is essential for applying the correct strategy and designing effective, ethical solutions in the ever-evolving landscape of human behavior.