Abstract:

Given the increasing growth and popularity of the video game industry, this paper will investigate the negative repercussions of a specific form of virtual loot, known as loot boxes. The literature surrounding the observed similarities and risks that are shared between loot boxes and gambling will be investigated, and behavioral economic methods will be used to elaborate on their structure in order to connect these shared similarities and risks. The purpose is to share not only the methodology for the market structure of these video game companies, but also to bring increased attention to the risks that loot boxes present, as addressed in the light of behavioral economics. While virtual loot serves to benefit both players and companies alike, alternatives to this form of microtransaction, as well as past/potential policy action will be discussed in order to reduce/eliminate the risk that loot boxes pose.