It can be summarized as the tendency to misuse simple games (dice) to model real-life situations and to apply naïve and simplified statistical models in complex domains.
In tech, we currently have a similar fallacy, implying that every service can easily be improved by using simple game mechanics.
The term coined to represent this is gamification.
And while I (and possibly many behavioral economists) agree that game mechanics can be of great use, using points, progress bars and badges hardly constitutes something as being a game.
These are, in fact, the least important elements in games, and using them should rather be called pointsification.
Game mechanics and dynamics are so much more.
Games set their players goals and then make attaining those goals interestingly hard.
- Margaret Robertson, Hide & Seek
There is an important difference between having fun and exhibiting predictably irrational behavior.
Frankly, pointsification as used by Foursquare and many websites with badges is a step forward and does yield results.
But calling it a game is wrong and we should save the term for when this has actually been achieved (involving real game designers).
And when this happens, we will recognize it because it will change everything.
If you ain’t got love, it’s all just keepin’ score …
- Bon Jovi, What Do You Got?