Denise - I agree that gamification in education is not new. I had a similar experience to that which you mentioned but it was more negative. In fifth grade, I recall the teacher awarding some kind of ticket or token for students completing work. These tokens could then be used to "buy" prizes and rewards from her. I was highly motivated and excited about this until I found out that another classmate was using social influence to gather tokens from other classmates and collected far more than should have been possible. This took the fun out of it for me as it felt unfair. I think modern day gamification, especially that which occurs in a digital setting, is able to avoid this kind of "working the system" and is a more positive experience for most users.
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I wonder if it is hard to work the politics out of any system, even digital ones.