DLC meets behavioural economics

A little while back, I wrote about some of the theory behind present biased behaviour. People who are present biased (i.e. place a disproportionately high value to things that happen right now, relative to things that happen in the future) can be aware of the fact that they are (‘sophisticated’), or not (‘naive’).

One interesting and important implication of the theory is that sophisticated people will respond to commitment devices that are costly. For example, Gine and others published a study in the American Economic Journal in 2010 that found people were more likely to commit to quit smoking if they had to put some money aside in an account, which would be taken away from them if they didn’t pass a urine test. Objectively, it seems like strange behaviour, because people who opt in are potentially throwing money away when they don’t need to. But, seeing as smoking is a prime example of present-biased behaviour, this kind of commitment mechanism counters the short run allure by adding in an objective (and binding) cost.

Hence, I was amused to see this article on Eurogamer that suggests an indie game developer is thinking in exactly the same way. The developer of the text adventure game Hadean Lands is charging £26.99 for “downloadable content”. This content is nothing more than a PDF certificate that you can print out and hang up to say that you completed the game without cheating or looking things up.

It is, quite simply, a commitment device in the same vein as the smoking example. Whilst it appears to be partially tongue-in-cheek, the idea behind it makes perfect sense given the aforementioned theory. Many players are likely to be ‘sophisticated’. They know that it will possibly bring them more overall satisfaction to complete the game without resorting to Google, but they also know that the temptation of cheating whenever they actually get to a hard bit in the game will be difficult for them to resist.

The certificate adds a cost (which they are consistently reminded of if they choose to hang it up where it is visible) to cheating. The £26.99 represents a monetary cost. However, the reminder of that monetary cost creates a psychological cost. It relies on the difficulty people face in ignoring ‘sunk costs’. The cost of something you have already paid for is already incurred, and shouldn’t be factored into future decisions, but it very often is.¹Think of a situation where you’ve just bought a very expensive pair of shoes that hurt your feet a lot after a little while. You probably should get rid of them because they are doing you more harm than good. Yet, the fact that you’ve spent a lot of money on them might make you feel like you need to wear them enough to justify the expenditure – even though wearing them is not enjoyable in the slightest!

What would be interesting to see is how many people (if any) actually take up this costly commitment. It may be that the stakes are too low in this case (cheating on a game might not make many people lose sleep at night). In that case, a price adjustment could make a difference in uptake. Regardless, the concept is intriguing. It’s nice to see ideas from behavioural science theory pop up in practice.