I came across an interesting article on how you can learn from consumer behavior theory to build an effective leveling system, Using Psychology to Design Leveling Systems
by James Madigan. Although there are some holes in the analysis, it raises a very useful connection between loss aversion and leveling and challenge systems in games. Although intended for mobile and video games, the lessons are also applicable to any gamified application.
Madigan starts by reminding readers that customers react differently to gains than to losses. If a player is rewarded with one bonus of 750 chips and an additional reward of 250 chips, they would be less happier than if they got a single reward of 1,000 chips (even though rewards are the same). People like gains lumped together. However, if a player gets killed in a game and has to use 750 chips and then 250 chips to keep playing they would be happier than having to spend a lump sum of 1,000 chips to keep playing. Players prefer losses that are spread out. This concept was popularized by Richard Thaler and won him a Noble Prize in Economics.
These findings are tied to the principal of loss aversion, the fact that people dislike a loss of X more than they appreciate a gain of the same X. They will thus avoid situations where they can lose compared to ones where they can win. This situation becomes an interesting opportunity in game design, Madigan points out, because you can bundle wins and losses. Since we give losses more weight, a 100 chip loss coupled with a 300 chip gain does not feel like a 200 chip gain, it feels closer to zero since the loss is overvalued. Slot designers have known this for centuries, most slot math couples lots of small losses (each spin) with some big wins.
This concept also is very relevant in product design, you do not want to take something away from your players. If a player has worked to unlock a level or a slot machine, locking it later in the game would feel like a bigger loss than the gain from unlocking it or another level/machine.
There are several key implications to optimizing your leveling system (or challenge system):
- Rather than give small rewards each time you level up (or complete a challenge), have them build up to one big reward. This could be by combining your leveling or challenge system with a collection mechanic, you get a piece each level and then every 10 levels can turn it in for a big reward.
- Spread the costs of leveling up out. Rather than forcing players to win a big costly tournament or defeat an uber-boss, have the player go through multiple sinks to gain access to the big leveling reward.
- Ensure your rewards for either leveling up or completing challenges are meaningful. Players need something big to overcome the perceived cost of the activity.
- People, and gamers, place a higher negative value on a loss than they place a positive value on an equal gain.
- People prefer that their losses are spread out but their gains are large.
- You thus need to ensure big, meaningful rewards for leveling up or completing challenges to offset the costs (losses) of the activity. You can do this by creating a collection mechanic that leads to a large reward.