The Invisible Economy: Incentive Framework
DADA’s invisible economy is based on an incentive framework that is aligned with our values.
Part 3 of 12
By Beatriz Ramos and Yehudit Mam
Part 2: DADA’s Invisible Economy
Economies are all about incentives. Incentives are what motivate people to act on their needs and desires. Extrinsic incentives like wages, awards, bonuses, promotions, or deadlines are imposed on a person from the outside. In contrast, intrinsic incentives come from our own internal drive to take action, our innate curiosity, or our desire to learn a new skill. We engage in the activity because performing the activity is its own reward.
In the industrial era, society was organized using extrinsic incentives based on the assumption that we are only motivated by the desire to seek reward or to avoid punishment. Our schools, workplaces, and legal system are all set up to reward good behavior and punish the bad. In Punished by Rewards, Alfie Kohn argues that all extrinsic incentives do is induce compliance. “If your objective is to get people to obey an order, to show up on time and do what they’re told, then bribing or threatening them may be sensible strategies.” This works well in assembly lines where work is organized in small, simple, mindless, repetitive, or boring tasks that no one wants to do.
In Drive: The Surprising Truth About What Motivates Us, Daniel Pink explains that extrinsic rewards, by their very nature, narrow our focus. They’re helpful when there’s a clear path to a solution, as in step by step tasks but goals imposed by others like sales targets, standardized test scores, or leaderboard scores can make us follow the quickest route to the goal, decreasing cooperation and increasing gambling, cheating, and taking shortcuts. Extrinsic incentives are effective for algorithmic work that involves following a set of instructions to complete a task but they are counterproductive for creativity, art, and innovation.
As technology advances, most algorithmic work can be performed by machines. But heuristic, artistic, empathic, non-routine work can’t be automated. Intrinsic incentives work best for heuristic work, which involves experimentation in order to come up with innovative approaches. We are currently transitioning from an industrial era ruled by extrinsic incentives, logic, and algorithmic work to an information era that requires new skills involving creativity and innovation, and that is ruled by intrinsic incentives and heuristic work.
The Invisible Economy creates the conditions to reward the inner motivations of people through a gamified system.
Gamification is the use of game mechanics in real life — the implementation of engaging incentives that motivate people to take action. Traditionally, gamification uses extrinsic rewards such as points, ratings, badges, and leaderboards to attract people and keep them engaged. It is used in every aspect of our lives, from frequent flyer miles and credit card rewards to customer reviews. But gamification can also be used to motivate people to act on their intrinsic needs and desires. In our platform, we designed our system to disincentivize competitiveness, status, and hierarchies. In DADA artists don’t level up; they earn colored dots as they make progress. There are no rankings and people can’t see how many followers they have.
Gamification is a good tool to filter bad actors without relying on curation or censorship. When we first launched our drawing platform, anyone could reply to any drawing. But sometimes trolls would reply to a beautiful drawing with crude drawings meant to deface it. We implemented a very basic system that requires a minimum of points for people to be able to respond to drawings. Anyone can still participate but now it requires effort to earn the right to respond. In a social network culture based on exponential growth, this kind of friction seems counterintuitive but it actually guarantees the quality of the interactions and it builds community. We don’t need to use negative tools like flagging or downvotes. Since we introduced the point system, those who want to deface DADA are instantly discouraged. Drawings that have not reached the number of points required to respond are not made public. Nobody sees them. Requiring a moderate amount of effort and commitment is an efficient way to neutralize trolls.
Gamification can also be used to motivate people to act on their intrinsic needs and desires. The Invisible Economy is organized around a complex, lifelong gamified system that aligns its incentives with the values of the community. Its gamification framework is composed of eight core behavioral drivers which we believe represent the main motivations for artists: Basic Income, Validation, Autonomy, Self-Expression, Greater Good, Creative Collaboration, Interdependence, and The Commons.
As seen in the diagram below, the Invisible Economy’s core values are organized in two intersecting axes: the horizontal axis comprises people’s needs for autonomy and belonging — it represents the balance between freedom and fairness. The vertical axis includes people’s motivations and it represents the balance between intrinsic and extrinsic rewards.
On the Needs Axis, the individual drives associated with the need for validation, autonomy, and self-expression are on the left side, and the communal drives associated with creative collaboration, interdependence, and the need for safety are on the right. On the Motivations Axis, the intrinsic and spiritual motivators associated with self-expression, the pursuit of the greater good, and creative collaboration are at the top, while the extrinsic and material motivators associated with a financial baseline, validation from audiences and peers, and long term wealth creation through the commons, are at the bottom.
DADA’s Invisible Economy follows a circular progression through the core drivers.
It starts by creating a support system that guarantees a minimum material baseline (Basic Income) and a place where art is valued and encouraged (Validation). These extrinsic rewards allow artists to act independently on their inner desires (Autonomy), follow their creative curiosity, and realize their full potential (Self-Expression), contribute their talents and efforts to a common vision (Greater Good), and engage in radical co-creation with other people around the world (Creative Collaboration). This builds the trust necessary for self-governance (Interdependence). And since the total value created is collectively owned, it builds wealth for everyone (Commons). The more value is created, the more people will join the system; and the more value continues to be created, the more basic income there will be for everyone. In this virtuous circle, the economy reinforces itself continuously.
While incentives drive people to engage in behaviors, motivations are associated with how we feel when engaging in a behavior. Positive motivators appeal to people’s sense of personal improvement or of a higher purpose, like drawing or being part of a new paradigm for the arts. Behavior and gamification expert Yu-kai Chou says that “If something is engaging because it lets you express your creativity, makes you feel successful through skill mastery, and gives you a higher sense of meaning, it makes users feel very good and powerful”. Conversely, negative motivators associated with extrinsic rewards like money and status can create obsessive, addictive, and gambling behaviors. People ultimately feel that they lose control of themselves. Online games like Candy Crush, casino slot machines, and art auctions all fall within this category.
According to Chou, “If you are always doing something because you don’t know what will happen next, you are constantly in fear of losing something, or because there are things you can’t have, even though you would still be extremely motivated to take the actions, it can often leave a bad taste in your mouth.” This is the reason why games like Candy Crush or Cryptokitties are temporary fads. People realize that they are hooked and that they may have been spending time and money without self-control, and once they are able to stop they don’t come back.
People often describe DADA as addictive, but drawing is a positive motivator that creates very good feelings. Activities like drawing are called evergreen mechanics. People engage in a creative process where they have to repeatedly figure things out and try different combinations. They express their creativity, they are able to see the results, receive feedback, and respond in turn. With evergreen mechanics, the activity is always fresh and engaging because the activity in itself is its own reward.
Positive motivators, however, don’t drive a sense of urgency.
Many people may want to learn to draw but never get to it, or they may want to support the arts but leave it for later. In contrast, negative motivators make games achieve virality, and they drive up revenues. Negative motivators create negative feelings when used to exploit people’s psychological shortcuts and to manipulate them into doing something they don’t want to do, like spending money or wasting hours of their time.
But negative motivators can be used ethically to drive urgency when someone wants to do something positive but lacks the motivation. They don’t create negative feelings when used to encourage people to act on their own desires and pursue their passion. Goals imposed from the outside like deadlines or scores are detrimental, but goals set by oneself in order to achieve mastery are healthy. A combination of positive and negative motivators can incentivize people to draw more frequently, to start an art collection, to collaborate, to take creative risks, or contribute to the community.
DADA’s incentives framework aligns with four different stages in our artists’ journey through the system: Discovery, Onboarding, Habit-forming, and Endgame. A new artist has never made a drawing on the platform has different needs and requires different incentives than veterans that have made thousands of drawings on DADA. As people advance through the system, the different stages emphasize different aspects of our incentives framework.
Discovery is meant to inspire people: it emphasizes our core drivers of altruism (Greater Good) and creative collaboration to convey our vision and our community values. At this stage, these core drivers are implemented through negative motivators used to drive people into action: use scarcity to get them to draw or collect for the first time, for instance. But we immediately go back to positive motivators during the onboarding stage. This is where we guide people to learn to use DADA, emphasizing Validation and Self-Expression, evergreen mechanics that make people feel good through mastery and creativity.
Habit-forming is the stage where people already know the rules and the most fun happens.
Here we emphasize creative collaboration and unlock different creative tools to remix art. This is the stage where we introduce the core drive of Basic Income. Since expected extrinsic rewards hamper creativity, the pursuit of a Basic Income should not be the main motivator to join DADA. Instead, it is a reward for the contribution of value once people have experienced making art with others. Currently, many artists on DADA are at the Endgame stage. These are the veterans, our organic ambassadors, and community managers. They understand DADA perfectly, they are the most committed and they are the ones who can drive innovation and push our vision forward. At the Endgame stage we emphasize self-governance (Interdependence), collective wealth creation (commons), and the greater good.
Research shows that in online communities, social networks, and open-source projects less than 1% of people are responsible for a disproportionately large amount of the total value created. DADA has over 160,000 registered users but less than 500 artists account for most of the 120,000 drawings created on the platform, with about 50 artists responsible for 70,000 drawings and one artist alone, María García is responsible for almost 12,000 drawings. Since it takes effort to advance through the incentives system of the Invisible Economy, people in the Endgame stage are the ones who have contributed the most value. Therefore, their shared power and influence in the community will grow accordingly. They will have access to more creative tools and to early art sales. The base value of their artworks will grow, and so will the percentage of their guaranteed basic income, as well as their voting power, privileges, and responsibilities.
While it is fair to allocate the most rewards to those who contribute more to the system, we don’t want the system to become a plutocracy ruled by an elite class, or to produce a star system in which only a few artists reap most of the rewards. Information networks tend to produce winner-take-all outcomes and monopolies but what we value and how we organize the resulting data is what determines the outcomes. If the system only values the amounts of drawings people create, then only those who can draw and who draw a lot add value to the system, while people who may love DADA but do not draw are ignored. If a system values artists and collectors only for the amount of work they transact, then the artists and collectors with the most money would end up ruling the system.
It is important to introduce different ways for people to add value to the system and take them into account in the total value created. For instance, people who spend time tagging, reporting bugs, or testing new functionalities add value to the system and should be rewarded for it. There should be different ways for people who appreciate art but are not artists or collectors, to add value to the system and be accounted for. We can also experiment with new concepts that expand our definitions of value. For example, “art that can’t be bought”. The system knows what are the best-selling artists at any given time, so there could be a cap in which some of their artworks would no longer be available for sale, but could only be earned or rewarded randomly.
By understanding the problems with free-markets and information networks we can change the outcome and design systems that incentivize people’s intrinsic motivations and result in a more equitable outcome.