Why We Spend: The Psychology of Virtual Currencies in Online Games
Online gaming has transformed the entertainment sector in an unprecedented manner by offering immersive experiences to millions of players all over the world. Key among these are the virtual currencies used primarily in today’s online games such as gems, gold and points which often form the basis for various microtransactions. This paper examines the psychological reasons for employing virtual currencies within the online gaming sphere, and discusses how they affect user involvement and influence player behaviour.. By drawing on peer-reviewed research, we aim to provide a comprehensive understanding of the psychological mechanisms at play.
Virtual currencies in online games function as in-game money, allowing players to purchase items, upgrades, and other enhancements. Unlike real-world currencies, virtual currencies are often acquired through gameplay or purchased with real money. Common examples include gems in mobile games like "Clash of Clans," gold in MMORPGs (massively multiplayer online role-playing games) like "World of Warcraft," and Vbucks in battle royale like "Fortnite." With that said let us now explore the psychological mechanisms at play when games implement virtual currencies:
Decoupling Real Money from Purchases:
Virtual currencies create a psychological distance between spending real money and making in-game purchases. This decoupling effect reduces the salience of actual monetary expenditure, making players more likely to spend without experiencing the immediate psychological pain associated with parting with cash (Hofacker et al., 2016). This mechanism can lead to increased spending as players perceive the transactions as less consequential.
Sunk Cost Fallacy:
The sunk cost fallacy refers to the tendency of individuals to continue investing in a venture due to previously invested resources (Arkes & Blumer, 1985). In the context of online gaming, once players invest real money to acquire virtual currencies, they may feel compelled to continue spending to maximize their perceived return on investment. This behaviour is driven by the desire to justify past expenditures, leading to further engagement and spending.
Operant Conditioning:
The use of virtual currencies leverages principles of operant conditioning, where behavior is shaped by rewards and punishments (Skinner, 1953). Games often use variable-ratio reinforcement schedules, where rewards are given after an unpredictable number of actions. This method is highly effective in maintaining player engagement, as the unpredictability of rewards creates a compelling compulsion to keep playing and spending to achieve desired outcomes (Hopson, 2001).
Endowment Effect:
The endowment effect describes how individuals assign greater value to items they own compared to items they do not (Thaler, 1980). In online games, once players acquire virtual currencies, they perceive these assets as part of their endowment, increasing their attachment to the game and willingness to spend. This effect is further amplified when players use their virtual currencies to obtain unique or rare in-game items.
Social Influence and Status:
Many online games incorporate social elements, where players can interact, compete, and showcase their achievements. Virtual currencies enable
players to purchase items that enhance their status or reputation within the gaming community. This desire for social recognition and status can drive players to spend more on virtual currencies to obtain rare or prestigious items (Dill & Anderson, 2005). The social influence mechanism is potent, as players often seek to conform to group norms or outdo their peers, leading to increased spending on microtransactions.
Hyperbolic Discounting:
Hyperbolic discounting is the tendency for people to prefer smaller, immediate rewards over larger, delayed rewards (Laibson, 1997). In the context of online games, virtual currencies often provide instant gratification, allowing players to bypass waiting times or obtain immediate benefits. This psychological preference for immediate rewards over long-term benefits can lead to impulsive spending on virtual currencies.
The Illusion of Control:
The illusion of control refers to the tendency for people to overestimate their ability to control events (Langer, 1975). In games, the use of virtual currencies can create a sense of control and mastery, as players feel that their spending decisions directly influence their success and progression. This perceived control can enhance the gaming experience and encourage further investment in virtual currencies.
Implications and Ethical Considerations:
While the psychological mechanisms underlying the use of virtual currencies can enhance player engagement and enjoyment, they also raise ethical concerns. The manipulative nature of these strategies can lead to problematic spending behaviors, particularly among vulnerable populations such as minors and individuals with a propensity for addiction (King & Delfabbro, 2018). Game developers must balance monetization strategies with ethical considerations, ensuring that players are aware of spending risks and providing tools to manage their expenditures.
Simply Put:
The use of virtual currencies in online games' microtransactions is deeply rooted in psychological principles that influence player behavior and spending. By understanding these mechanisms, we can appreciate how virtual currencies enhance engagement and drive revenue while also recognizing the ethical implications of these practices. As the gaming industry continues to evolve, it is crucial for developers to implement responsible design practices that prioritize player well-being alongside profitability.
Reference List:
Hopson, J. (2001). Behavioral game design. Gamasutra.
Skinner, B. F. (1953). Science and Human Behavior. Macmillan.
