What Drives Demand for Loot Boxes? An Experimental Study

41 Pages Posted: 8 Feb 2023

See all articles by Simon Cordes

Simon Cordes

University Bonn

Markus Dertwinkel-Kalt

University of Münster; Max Planck Institute for Research on Collective Goods

Tobias Werner

Center for Humans and Machines / Max Planck Institute for Human Development; Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Date Written: February 8, 2023

Abstract

The market for video games is booming, with in-game purchases accounting for a substantial share of developers' revenues. Policymakers and the general public alike are concerned that so-called loot boxes - lotteries that offer random rewards to be used in-game - induce consumers to overspend on video games. We provide experimental evidence suggesting that common design features of loot boxes (such as opaque odds and positively selected feedback) indeed induce overspending by inflating the belief of winning a prize. In combination, these features double the average willingness-to-pay for lotteries. Based on our findings, we argue for the need to regulate the design of loot boxes to protect consumers from overspending.

Keywords: Gaming, Video Games, Gambling, Loot Boxes, Microtransactions

Suggested Citation

Cordes, Simon and Dertwinkel-Kalt, Markus and Werner, Tobias, What Drives Demand for Loot Boxes? An Experimental Study (February 8, 2023). Available at SSRN: https://ssrn.com/abstract=4349674 or http://dx.doi.org/10.2139/ssrn.4349674

Simon Cordes

University Bonn

Markus Dertwinkel-Kalt

University of Münster ( email )

Universitätsstraße 14-16
Münster, 48143
Germany

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Tobias Werner (Contact Author)

Center for Humans and Machines / Max Planck Institute for Human Development ( email )

Berlin
Germany

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

HOME PAGE: http://tfwerner.com

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
296
Abstract Views
1,046
Rank
191,937
PlumX Metrics