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Cardlytics ($CDLX) and Operant Conditioning

Delivering offers in random timing and amounts leads to addicting behavior.

For all my notes on CDLX, check out my Qualitative and Quantitative “Research Notes”:

Cardlytics ($CDLX) and Operant Conditioning. Delivering offers in random timing and amounts leads to addicting behavior.

Ever notice how addicting social media apps have become? Find yourself constantly refreshing and reopening those apps?

What about with your bank app?

Maybe not as well noticed yet by individuals, some people may be developing these same habits with their banking apps.

Bank apps such as Wells Fargo, Bank of America, and JPM Chase which are powered by Cardlytics, and other apps such as Venmo that are powered by Dosh (who was recently acquired by Cardlytics), have a section within their app with a list of offers for discounts off your purchases. Given that the timing of when new offers appear is random, as well as the number of new offers, users may find themselves over time checking back with the app at unusual rates.

The reason can be explained by B.F. Skinner's explanation of operant conditioning with a variable schedule of rewards. Skinner found that mice would press a lever most frequently when the reward of food pellets varied in time and size of delivery. This can be rationalized by failure to identify any pattern. If for example the reward was delivered every third press of the lever, in the same size, once per day, once you discovered the pattern, you would likely only press the lever three times and receive the expected reward, and be done with it for the day. But by varying the reward, and not being able to identify when it will occur, nor its size, you are forced to press the lever much more often in the same day, and develop a habit of doing so.

In addition to operant conditioning, Cardlytics also benefits from other human psychological misjudgments. Incentive caused bias from giving offers to save money, justification tendency and liking tendency from seeing the total amount saved increase within the app, consistency bias from feeling you should always eat or shop somewhere with an offer to save money, and more. Combined together, you could start to have a lollapalooza effect.

-Austin Swanson (Swany407)

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis. Please see the Disclaimer page for more details.


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