Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
October 31, 2014
arrowPress Releases
October 31, 2014
PR Newswire
View All
View All     Submit Event





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


 
Irrational Play and Design: The Psychology of Money
by Gary Dahl on 04/25/13 04:54:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

This is part two in the series on Irrational Play and Design. You can find the entire series thus far compiled as one article here, or you can find the first entry here.

Week02: The Psychology of Money

        2.1 Opportunity Cost

Shadow Values: Every time we spend time or money on anything, we lose the ability to spend that time or money on anything else. Because “anything else” is such a vast set of alternatives, our brains consider only a small subset of those alternatives with each decision we make. This “cheating” can lead to irrational decision making. For instance, participants in one study showed a preference for a superior quality stereo that costed $300 more than an alternative. However the inferior stereo was preferred by participants after it was bundled with $300 in music and priced the same as the better quality stereo. One explanation for this result is that participants were not considering all of the possible uses for the $300 savings provided by the inferior stereo in the first offer.

In-Mind Purchases: Some games present the management of scarce resources and opportunity costs as a central challenge. In games like Le Harve and Star Craft 2, player success depends heavily on how well players appraise the changing values and long term opportunity costs of their actions. Helping players organize and remain cognizant of these trade-offs is especially important in such games. Other games treat purchases as rewards. In a game like Zelda, you can always slay a few more monsters to earn some extra money (Rupees), and it’s generally in your best interest to buy all of the most expensive stuff you can afford. In these games, incentives can become more salient by clearing conveying their specific benefits. As an example, instead of promising a mystic artifact or a chest of gold, promise a sword that does twice the damage of the player’s current sword.

        2.2 Relativity

Relatively More: We touched on the brain’s preference for relative over absolute comparisons while discussing decoy effects and the importance of establishing baselines in section 1.4. But even with good baselines in place, we are likely to compare differences in terms of relative percentages over absolute differences. For instance, consider how much influence a $5 coupon would have over your decision to shop at one store instead of another. A $5 coupon for a $7 sandwich is likely to persuade us more than a $5 coupon for a $2000 television. This is because of the difference in relative savings (71% versus 0.25%), since there was no difference in absolute savings ($5 versus $5).

Delusions of Progress: I believe this is a lesson that many designers are in tune with. Computer role playing games (among others) commonly use exponential curves to ramp up the amount of damage a player deals, the amount of gold they collect, and the benefits of the equipment they find or purchase. Regularly doubling these kinds of stats provides players with a much greater sense of progress than the smaller feeling increments of a linear growth curve. The deck building card game Ascension utilizes another trick to provide a similar sense of growth. This game includes many cards that are two to three times as powerful as others. But when played within a hand of more mediocre cards, one of these doubly powerful cards really only represents a 20% increase in the power of your entire hand.

        2.3 The Pain of Paying

Where it Hurts: The loss of money when making a payment can be so upsetting that it colors our opinions of the goods and services we purchase. What’s interesting is that the intensity of this pain can be manipulated by the proximity, frequency, and forms of the payments that we make. For instance, consider paying for a vacation on a cruise ship. Would you prefer to 1) pay in advance, or upon returning, 2) pay in one lump sum, or make daily payments, and 3) pay with a credit card, or with cash. The first option in each case should result in the least painful experience and thereby help you enjoy your vacation more fully.


Persuasive Pattern

For Better or Worse: Presumably the purchase options in a game are there to make the game more fun, and should be made as painless as possible. One possible exception to this rule is that some purchasable goods may be so powerful, that you want to discourage their use. In addition to raising the price of these goods, you can consider changing how they are paid for. In worker placement games like Stone Age, there is a per-round food cost associated with each member of tribe, instead of a one time up-front cost to acquiring them. In Fallout 3, there are many disposable objects that either degrade with use or permit only a single use. These objects need to be acquired frequently but can usually be traded for, which is less painful than spending your valuable money (caps) on them.

        2.4 Mental Accounting

Money Buckets: Mental accounting is another trick that our brains utilize to manage the otherwise overwhelming number of alternatives involved in making purchase decisions. The idea is that once we allocate or budget money for a particular use, we have a hard time thinking about using that money for any other purpose. The only game experiences I can relate to this, include complex simulation-based games. In the indie computer game Democracy 2you govern a nation by selectively implementing policy changes. For instance your country might have a pollution problem, so you increase a gas tax with the intention of later spending that revenue on green technology research. Imagine that this tax significantly improves air quality on its own, but has the side effect of hurting employment. Investing in public transportation or reducing the existing tax rate might become more beneficial investments. But we’re often stubborn about spending money intended for a specific use on anything else.

        2.5 Fairness and Reciprocity

What you Pay For: This lesson includes two biases in our sense of fairness while purchasing goods and services. First, when a service takes a long time to render, we’re more likely to attribute that time to the difficulty of the service than the incompetence of the provider. This can lead us to feeling justified in paying more money for what may actually be an inferior service, or vise versa. A similar phenomenon occurs when purchasing goods. We’re more likely to associate the value of a good with its apparent marginal cost, than any one-time start-up costs. This might explain why some people are frustrated with the pricing of many ebooks in relation to their paper counterparts. In both of these biases, we are utilizing one source of available information as a substitute for another independent source of missing (or at least more speculative) information.

Cost of Investment: Fairness in games often reduces down to how each player’s chance of winning is influenced by their skill in playing. So when random events inordinately advantage or disadvantage a player, this is often seen as unfair. The middle ground case is when games present random threats or opportunities that only effect properly prepared players. Such players may be lauded for their skill in preparation, or considered the benefactors of good luck and fortune. From the research, it seems like one influence on this determination might be the cost of their preparation. Another factor might be the likelihood of the particular threat or opportunity’s occurrence.

        2.6 Loss Aversion and The Endowment Effect

Ownership Effects: When we acquire ownership of an object, we quickly familiarize ourselves with the advantages of that new ownership. We then adjust our baselines for happiness to include all of those new-found benefits. An interesting consequence is that we commonly over-value the objects in our possession. This also results in loss aversion, because the loss of our over-valued possessions is more painful than the acquisition of these objects was pleasureful.

Thematic Consequence: An argument could be made that the trade-off between rewards and punishments occurs in every game. Games commonly involve earning points of some kind(s), but could just as easily be about avoiding the loss of points. Mathematically, you simply multiply the points you are earning by negative one and they become losses. But the experience of trying to avoid losing your possessions is often very different from that of amassing wealth and power throughout the course of a game.

        2.7 Market and Social Norms

Business or Pleasure: When fiscal and social economies interact with each other, the result is not always complimentary. For instance, an offer of a few dollars is likely to make your friends less willing to help you move heavy furniture, than if they were just doing it to be nice. The common practice of removing price tags from gifts is another example of where there can be friction between these two economies.

Play Nice: Some competitive games explicitly encourage players to work together. For instance, you can trade resource cards with your opponents in Settlers of Catan. Mutually beneficial trades can be negotiated in this game, but a competitive player should only accept such trades from players they are beating (or will be after their trades). Once this kind of exchange is made, there’s rarely any expectation of continued cooperation since each player is presumably acting in their own interest of winning. However in a game like Risk, players can offer each other social “favors” in the form of promising not to attack along a weakened border. This gesture is beyond the game’s rules, and is probably tied to an expectation of later reciprocation. The line between tactical maneuvers and social offerings of this kind is blurry at best. This makes it critical to observe a wide variety of players and groups of players experience your game through playtesting.

        2.8 The Price of FREE

Favorite Price: It’s no secret that people love getting stuff for FREE. We’ve probably all stood in ridiculously long lines, filled out complicated surveys and rebate forms, and payed exorbitant handling fees for the satisfaction of getting something for “nothing”. So I doubt many people are surprised when they learn that this magical price of zero occasionally solicits irrational behavior.

Pay to Play: The economies within games are a fiction that helps explain rule sets, and incentivize certain behaviors. As a game designer, you can add cost to or remove cost from every possible action. In the game Sim City for instance, what if players could build roads for free? Or what if roads carried with them a recurring maintenance fee? Presumably both of these changes should impact how players layout their virtual cities. Monopoly‘s $200 for passing GO is another interesting case. Couldn’t the costs of real estate and other fees be changed so players typically spend $200 less per trip around the board? Or does this fiction of receiving a free $200 make the game more enjoyable?

        2.9 Micro-Payments

The Bad News: One problem with micro-payments is that they amplify the pain of paying by requiring us to make many purchase decisions instead of just a few. This can lead to more frugal spending, and less enjoyment of the items purchased. Within games, purchases are just one of many kinds of player decisions. A big part of the game designer’s job is to strike a balance between the number and frequency of decisions a player must make, the difficulty of making those decisions, and how they contribute to the larger experience of the game. One game design lesson from this research is that many smaller decisions may add up to more than the sum of their parts in terms of the burden that they place on players.

The Good News: There are techniques for mitigating the pain of paying. Charging upfront for a subscription forces payers to allocate money to be spent in a particular way (ie. mental accounting). This helps reduce the number of alternate uses for this money the payer must consider as opportunity costs. Providing a limited number of price points in another way that sellers can make micro-purchase decisions easier. This allows buyers to focus on their preferences while purchasing, instead of having to weigh their preferences against many small differences in price. I suspect that similar techniques could be applied in game design. However game designers have many more tools to help ease their players’ burdens. The most blunt of these tools might be removing the need for making any particular decision all together.

[Thanks for reading. Please, let me know what you think about this article, if you have questions, and whether you'd like to see more of the material from this class covered in the same way.]


Related Jobs

Rensselaer Polytechnic Institute
Rensselaer Polytechnic Institute — Troy, New York, United States
[10.31.14]

Assistant Professor in Music and Media
The College of New Jersey
The College of New Jersey — Ewing, New Jersey, United States
[10.31.14]

Assistant Professor - Interactive Multi Media - Tenure Track
Next Games
Next Games — Helsinki, Finland
[10.31.14]

Senior Level Designer
Magic Leap, Inc.
Magic Leap, Inc. — Wellington, New Zealand
[10.30.14]

Level Designer






Comments


Ramin Shokrizade
profile image
Thank you for writing this up Gary. Given that I have been using behavioral economics to create new monetization models and virtual economies for the last eight years, I had a number of friends recommend this lecture series to me but I was traveling between studios and missed your first post on the 10th. Obviously I am a firm believer that the application of these principles and behaviors can be used to bring better products to consumers.

I really see the default principle at work a lot for designers as well as consumers. For instance, if as on Facebook they are presented with two monetization models as such:

1. Zynga model with 98% consumer conversion rejection rate,
2. "Midcore" model with 95% consumer conversion rejection rate

Most developers will assume they only have these two options. Given these two options they will chose the second, which is why even Zynga has recently declared that they are going "midcore". When I present evidence that both of these models are inferior to models of my manufacture, they not only tell me this is impossible, but they even sometimes get hostile. Note that conversion rates of as high as 50% are achieved in China, though the methods used there are generally much less effective here.

It is also well known that making many small purchases in this space is much more painful to consumers than making one larger purchase. I explain this in more detail in my "Supremacy Goods" microeconomic model published here last year. Nonetheless, the trend on Facebook (where they claim to use science to optimize their products) is to hit consumers with a shotgun blast of as many purchase options as possible.

The point I would like to make is that once this science trickles down to game designers, our products will be hitting much higher conversion rates than what we take for "good" now. When I see a studio brag about 95% rejection rates I just shake my head in disbelief.

Curtiss Murphy
profile image
How do you overcome the basic problems of free? Like, many that download my product never run it at all! I can't complain, cause I do that all the time. "Oh, a SQL database tool for free..." ?!?! Which I delete, a few weeks later.

'Rejection rates' is intriguing. Right now, my goal is for 25% of my customers to finish the free content and 25% of those to have enjoyed it enough that they continue with the premium content. That seems reasonable, and yet, doing the math, I'll still have a 94% rejection rate (1.0 - 0.25 * 0.25).

Ouch...

Ramin Shokrizade
profile image
Curtiss, yea most developers have not figured out how to raise conversion rates so instead they try to "convert deep" by making it up with whales. In your case, you probably are not going to be getting many whales tapping into your non-game application...

Zynga would be ready to conquer the world if they could get their rejection rates down to 94 % :)

Blaze Sarkisian
profile image
I've always found that item bundles sell well on the games I've worked on. I've always assumed that's entirely due to the perceived savings vis-a-vis buying the items individually.

However, Ramin, you and Gary have shown me that another possible explanation is that the player can experience a feeling of relief by theoretically reducing the amount of purchases they plan to make, thereby easing the pain of purchasing.

Thank you both for your excellent work!

Alexey Onischenko
profile image
Great post. I think you are right.
What about Clash of Clans ? they are different between others midcore games.

What about league of legends and World of tanks they have more then 50%?

Ramin Shokrizade
profile image
@Alexey: What is occurring with WoT and LoL is explained by my Supremacy Goods virtual economic model I published here last year: http://gamasutra.com/view/news/177237/The_new_rules_of_monetizati
on.php#.UEs0NY1lThM

James Wang
profile image
I was just having a discussion with my colleague about people's odd perceptions of time vs. money. In particular, in certain free-to-play games, it's extremely worthwhile (from a time saved perspective) to spend real cash, rather than earn in-game currency to make purchases.

Let's say it's possibly to farm, say, 500,000 coins per hour, if you're at a high level and fairly skilled. On the other hand, a single dollar is worth 1,500,000 coin, on the in-game exchange market.

For almost any level of income, your time is better served just shelling out a *dollar* than to actually farm and grind the coin in game. But as everyone knows, conversion rates in the US for paying customers are quite low.

So F2P games are designed around whales, and a basic tenet of F2P game design is that no one should ever have a spending cap.

Wouldn't it be nicer if we could convince a larger percentage of players to pay, and not require them to spend hundreds, thousands, or even tens of thousands of dollars, in order for a game to be profitable and worth a dev or publisher's time and resources?

The key issue as I see it is people's general inability to really grasp the Price of Free, as you described it, along with a general expectation for digital things to just be free. I honestly think it's worth investigating how to create a cultural shift whereby people stop expecting everything to be free and stop being willing to spend so much of their TIME obtaining "free" things, and just stepping up and throwing out a few bucks to worthwhile products so they can spend more time doing what they enjoy, rather than the busy work necessary to play.

Christopher Enderle
profile image
Could be rooted in social stigma. Playing video games has a negative connotation already, but now we're asking people to waste time AND money playing video games? Perhaps first we have to establish video games as socially and culturally valuable and enriching.

Ramin Shokrizade
profile image
Again I think my Supremacy Goods microeconomic model from last year would shed some light on what is going on here: http://gamasutra.com/view/news/177237/The_new_rules_of_monetizati
on.php#.UEs0NY1lThM

Jennifer Goss
profile image
The problem with that is that every 'free to play' game I have ever played (and I play a number) has a drastically broken game model. I have paid for an item once since it was a type I collect; but I would never pay more on that game. Considering, 20$ a month to subscribe? (that would be 240$ a year). Or, 10$ every time I want a single item? (that has no practical use othre than to look at). Or, I could waste several dollars at a pop to "correct negatives" (speed up gameplay, get resources to complete tasks). I never pay to correct a flaw in game design. If a game becomes endless, repetitive "grinding" for the sake of hoping players will pay to get past it, I uninstall it or ignore it. It's one thing to grind to get a weapon or character, it's another to grind for hours just to get to the next story snippet! [pet peeve: clicking the repeat button hundreds of times].

There is one game I have found, that has very decent writing and gameplay, that I have been tempted to spend money on. Unfortunately, the company keeps raising their prices, and has lately been introducing more 'grinding', so I have not yet. They keep appealing to the rich player, apparently, who doesn't mind dropping 20$ for a weapon or item every other week. Why would I spend massive amounts of cash, for a game I still have to work to stay competitive in, and that isn't as robust as a game I can go buy off the shelf? For a freemium game, that I like, I usually plan to spend up to 10$. If, however, the game is simply a gold mill (no content, just traps the player into needing to buy stuff), or buying something will not make a difference, or everything is too expensive, then I will not buy anything.

Are we obligated to pay? No. If the developer want's to charge 50$ for a game, they should charge 50$ for a game. It is up to the developer to know what the best platform is before they launch the game.

The freemium model is a "you pay, or you work". You contribute time, or you contribute money; sometimes both. Ideal games will be playable at a basic level, and not monotonous, without paying. The best freemiums have their cost items be sidegrades, sometimes slight upgrades, to special edition items. [The worst freemiums are "you have 15 energy. Plant a daisy. Come back in five minutes to pick! Pay one crystal to speed up. Sell to store. You have made three rubies! Buy a strawberry. Plant. Come back in ten minutes. You are out of energy...]

A developer cannot blame their players (Well, unless the players are pirating the game, then they can). They *can* find a different model, or tweak the one they have to take different pay points into account.

Erin OConnor
profile image
Rather than calling it free, call it a trial, evaluation, assessment, appreciation, editorial, review, or critique, version.

There is a whole psychological word association thing that politicians use.
Remember death taxes? Well, there is no such thing.
What they are is an estate tax.
Path to citizenship anyone?

Gary Dahl
profile image
Thanks for the comments guys. It's interesting to see everyone picking up on the sales/business value of these lessons. I wonder if the Gamasutra News feed title and description is priming people's brains into that mode of thinking. I hope this understanding of how the brain works can also help us make games that are more fun. As a game designer, that's my answer to the concern about FREE: Design games that are so compelling that people are willing to pay much more than you are asking for the pleasure of playing them.

Steven Christian
profile image
Personally, I find that getting over the initial hurdle of making a first purchase is the hardest; once I have overcome this, I find it much easier to continue spending, and in fact I feel COMPELLED to spend.
I rationalise that since I have already invested money, if I do not invest more money, then the original investment is wasted.

Of course, in reality, I am just wasting more money, but if I am enjoying the game then so be it.
It is when I am no longer enjoying the game but still spending money based on the original principle, that I begin to despise myself, and the freemium model in general.

But if we keep the games fun, then I guess there is no problem, right?

Kristoffer Larson
profile image
Thats an interesting point Steven - it sounds pretty close to the 'escalation of commitment' phenomena. I wonder if F2P game designers might be able to use a low initial price point for a transaction just to get players hooked so that they rationalise further, presumably higher priced, purchases in the future.

Nick Harris
profile image
I thought that you might have touched upon this when you wrote about 'What you Pay For' and 'Favourite Price', but I'm unsure... so I say it here.

I think that there are a lot of consumers who are suspicious of something that is much more affordable than the typical 'What the Market Will Bear' price (or indeed, entirely free and without micro-transactions or pleas for charitable donations), and won't want to 'Spend their Precious Time' on something they may falsely think to be of substandard quality.

This applies to reasonably priced indie games, which may be more fun than full-price AAA titles and provide similar longevity of play-time, but do themselves out of potential customers by being priced well below what their market niche would be prepared to pay for them and in consequence appear to be 'Cheap and Nasty'.

- How can they be any good for $X?

- How can this iOS game be any good, it is only $1?

- Look at this iOS game... why should I even waste my time downloading it when it is free?

I think this may explain why Apple products are more expensive than equivalent devices. Sure, they do a lot of R&D, make beautiful designs and spend a lot on advertising compared to their competition, then there is the way that the other open architectures fiercely compete over component price and lower costs, but the Apple kit tends to be built out of the same technologies (if not a year behind their original appearance on the open architectures, as if they were waiting for the bugs to be threshed out, standards to be established and bleeding-edge prices to disappear as economies of scale bore down upon prices), only at a fashion boutique artificially created exclusivity through rarity based upon a significantly higher price tag. It would seem that they are happy to sell fewer if it means that they can be individually priced higher. What is worth noting is that you are getting the software at a significantly subsidised rate and it is the effort made in integration of the hardware behind a 'spare me the details', virtually zero-administration, interface that attracts creatives (and, probably, repels a lot of technical types). Even if Apple were to use its vast cash reserves to lower the cost of their stuff and force their competition out of the market for one or more generations of hardware, it would lose them all of their cachet amongst the fashion-forward cognoscenti who dictate what is trendy and cool. Apple should not try to be Amstrad and I wonder if indie developers should continue to undervalue their work in the eyes of their potential consumers.


none
 
Comment: