The science behind staking
The research and technology that underlies the app is a relatively new branch of psychology known as behavioural economics, pioneered by Nobel Prize winners Daniel Kahneman and Richard Thaler.
It’s the study of how people make decisions, and it’s based on experimentation of actual human behaviour, rather than traditional economic modelling. There are two relevant discoveries.
First, human beings overvalue the present and undervalue the future. We’re not very good with long term benefits like weight loss, because in the short-term, we’d rather have a donut. And actions are short-term.
Second, humans are ‘loss averse’. Much more sensitive to losing things we’ve already got, for example money, than we are to striving for things we haven’t yet got, i.e. goals. Kahneman won the Nobel Prize for this in 2002.
There’s a vast amount of economics, psychology and behaviour science showing that money influences our behaviour. Knowing that we’re loss averse, we can use our aversion to losing money to generate short-term (weekly) actions.
Getting started is the hard bit and staking has been scientifically proved to be a powerful extrinsic motivator for this.
You don’t need extrinsic motivation forever. Once you’re in action, the brain re-wires itself (neuroplasticity) and changes its attitude towards the action. Habit formation results.
fMRI brain imaging over the past 20 years shows that when you risk money, you activate the same parts of the brain as if your survival is threatened (amygdala, insula and ACC). This circuitry has privileged access to the action centres of the brain, meaning you can do things you wouldn’t normally be willing to do. This of course makes sense from an evolutionary perspective; when your survival is threatened, it’s action-stations.
Why does money activate your survival circuitry? Because humans have spent the past 5,000 years attaching a monetary value to everything in our environment. So when you risk losing money, your brain thinks you’re going to die, and it’s willing to change behaviour.