Rewards. In the game I'm going to run, the more "dramatic" Failures increases the cp gain of the PCs in the course of a story. This works since what every they gain or succeed in has its own temporal (in-game) rewards but failure or to the GM heightened challenge makes for more "drama" when the PCs finally overcome the climax.
In Organizational Game Flow, a reward is a point where there is a fork in the road. Typically in a game, because of the challenges this is in the form of success or failure. Of course there is a Qualification of FUN, Drama, and Consequence which has to be assessed in the end of the game.
If the PCs $ucked a$$ but in interesting way that drives the story forwards they should gain XP/CP. They gain extra "credit" if the result was tragic to give the PC power to reverse the tragedy or move the story flexibly toward another parallel path.
On the other hand, the PCs succeed and overcome the challenge there should be some form of consequence. Typically, if this act is towards a greater goal the GM awards the player some temporal advantage in context of the challenge.
Ex. A PC successfully seizes an opponent's power, taking possession of his enemy's base and resources would have these assets as the consequence and reward.
If the PC succeeds and diverges from the story or the general path, and carves out another story with the approval of the GM and the other players then the consequences should be enough of a reward. Why award the Player CP/XP for something his character has already been awarded?! Typically this practice was made because the PC's success is only temporary and the PC doesn't know how to capitalize on what they have just achieved.
In the Critical Thinking RPG should be engendering is being limited by the closed system kind of thinking the purely GAMIST process is moving towards. Time and Labor is limited and your better off playing an MMO than playing a closed system game which tries to become a closed system.
Deeper into Discussion...
I've had many discussions with my friends in the use of GAMES as a teaching and learning medium. One of the key points of the discussion is about how it affects and molds thinking.
I will not go into detail of the Merits of Games into developing a critical thinking process, I'm sure I don't need to explain this if the reader was a gamer because they have already discovered this already.
Focusing on the Title, I'm interested in talking about the way Games Mold thinking in the two different mediums: open and closed. What I mean by closed system, I'm speaking of games with clearly defined rules and mechanics that has everything operating within it. Many Games fall within this category, from the simplest board games to the most complex Computer Games. I don't know if there is such a term as "open" system games, but contrary to closed System games, Open System games are pretty free formed like many story telling games and RPGs.
The most dominant and popular between the two is closed system games (csg for short) by far. There are many reasons that make this so, reasons that I don't need to revisit or else make this a long thesis. What I mean to delve on is how the mind works with the rules and without rules.
CSG has structure and requires an approach in order to master it.
OSG on the other hand has very little structure but can be approached with any method, as long as the method is flexible enough to work with the circumstance.
As a OSG RPG player and GM, one of the most difficult processes to tackle is OSG when one's mind has an underdeveloped approach to the situation. Strangely Handling OSG and trying to put it in a simplified format is one of the fundamental problems that Philosophy is always trying to answer for every individual and their unique experiences.
One of the most revealing about GMs and Players are the weaknesses and their approaches towards games. There is something so telling about how people digest and processes such abstract concepts. The revelation can pose some serious reflection on how people work to simplify and process the world around them and how uncontrollable the world is to those who do not seek to understand it.
... I'll stop right here, my head is hurting already thinking about this and keeping things coherent.