Have you heard of behavioral economics? It’s the combination of behavioral psychology and economics and studies the cognitive, social and emotional factors that influence purchasing decisions.

Having majored in Psychology and being the Chief Marketing Officer at a Free to Play studio, Gazeus Games, behavioral economics fascinates me and is a topic I deal with on a daily basis. Many sales techniques have been derived from studies made in this field and they are currently widely implemented into Free to Play game strategies.

So I thought it would be interesting to collect some of the best examples of behavioral economics techniques in practice in free to play games, as well as share some of the most interesting bits of information I’ve found in articles and books exploring the subject.

There are some really great articles from UX designers and blogs like Deconstructor of Fun. I’ve added a bibliography at the end of this article. Below is a list of some of these effective behavioral economics strategies accompanied by real-life examples.

Decoy Pricing Strategy

When preferences for one option change after similar but less attractive options are added.

Decoy Pricing refers to the idea of using at least (sometimes more) offer with a less appealing price, to subtly encourage players to make several small purchases or a big one.

In Hearthstone, the price of  7 Packs isn’t very attractive ($9.99), so players feel encouraged to go for the 2 Packs ($2.99) option, or the big 15 Packs ($19.99) deal, because these seem like a much better deal when compared to the decoy 7 Packs offer.

A famous example of decoy pricing was highlighted outside of the Free to Play gaming sphere by Dan Ariely in his book, Predictably Irrational.

The above image is of the subscription offer presented by The Economist. If you look closely you will see that the print subscription and Print & web subscription cost the same, isn’t that weird? 

Ariely conducted a study and found that 84% of people chose the Print & web Subscription, 16% chose the first option, and 0% chose the middle option. So why have the middle one? Well, he removed it and found that, when faced with only two options, 68% of people began to chose the first option. What he demonstrated was that the middle option did serve a purpose: as a decoy to upsell subscribers from a $59 purchase to a $125 one, since the middle price makes the last option look like a much more attractive offer in comparison. 

Anchoring and Priming

This is a cognitive bias that describes the human tendency to “anchor oneself” (or focus)  on part of the information received when in a decision process.

In another way, it designates how difficult it is for humans to distance themselves from the influence of the first impression, the “priming”.

Prices are commonly anchored in our memories based on general associations: high, low, etc. They’re rarely remembered as exact values. When memorizing an “anchor” price for different products, we can then use them as a reference, comparing them to relative values. We do priming of this “anchor”: this occurs because we have a need for consistency, in order to avoid cognitive dissonance.

Priming is an effect of the implicit memory, where the exposure to a stimulus influences the response to another stimulus, in an unconscious and unintentional way.

Anchor prices are frequently irrational. In a famous experiment of behavioral economics, researchers asked people to write down their social security numbers on a piece of paper. They were then asked to estimate the prices of several items (for which they didn’t have any previous anchor for, like “exercise”, “gym” or “bikes”).

The result was consistently the same: people that had high values for the last 2 digits of their social security numbers, like 99 or 98, estimated the prices as being higher than people whose social security numbers ended in lower digits. That is, the simple fact of having recently written a higher number on a piece of paper was enough to anchor people into estimating higher/more expensive prices for random items. This type of experiment has been repeated in several countries with many different items. The results tend to follow the rule.

The above image is a snapshot of the results from this experiment performed in the USA, showing the subjects’ social security numbers and the prices they estimated.

There are many widely used anchor and priming strategies, below are a few examples:

• Amazon: shows products with high prices together with products with low prices;
• Increasing the price of old products so that new products look cheaper in reference to the old ones.
• Stores making it easy to see how many items of a certain kind were already sold (this is also useful as social validation), or positioning any other big number close to the price;

Humble Bundle’s web site above shows the number of bundles already sold as an anchor and as social validation.

Pricing Strategies

Purchase decisions often happen irrationally, but predictable patterns can be observed within this irrationality. When it comes time to actually sell something in a Free to Play game, it is necessary to reduce the friction for the buyer and reduce their cognitive load during the decision making process. Any friction could lead the potential buyer to give up on the purchase. Some strategies to reduce friction in pricing are:

a) Reducing the left digit by one cent

Reducing the left digit by one cent exerts a clear effect on conversion because we read left to right, and ‘anchor’ the 4 in 4,99, instead of a 5.

b) Picking prices with fewer syllables

This is a weird one. With more syllables the cognitive load and processing time of the price increases, simply because it takes longer to say the price in our head. 

The same thing happens with the use of a comma in the price.

c) Price per day

Instead of mentioning the total price of the subscription, explicitly show the daily price to be paid. Instead of $14.99 a month, opting for $0,49 per day. The effect is usually even better when the price is compared to an “everyday purchase”, like “the price of a coffee” or “a stick of gum”.

d) Remove references to money

Removing the dollar sign can diminish the friction and pain associated with a purchase. Another way of doing this is by using virtual currencies instead of actual dollars for the prices.

The above-shown game, Rider, explicitly avoids using dollar signs in their pricing. There’s the matter of UX here to be discussed, of course, but this is definitely an example of a psychology-based pricing strategy.

The Endowment Effect

Behavioral economics has found that we tend to value things more when they belong to us. People connect sentimental value to items because of everything we live through with that item, and the legacy we’ve built with it.

The game Slotomania is one good example of a game that makes excellent use of this tendency, through the Piggy Bank mechanic.

A player’s piggy bank fills up as they play and the user feels like it is filling up due to their effort and hard work. Therefore, the user feels like they own whatever they’ve stored there and that they’re entitled to what’s in there. This “entitlement” increases the chance of a user paying to break the piggy bank and take what’s rightfully theirs.

Analysis Paralysis

When faced with many choices, decisions tend to become more complicated, sometimes causing cognitive overload. Therefore, by giving people more choices, we may lose revenue/conversions instead of increasing them.

In an experiment created by Dan Ariely, in his book Predictably Irrational, economic scientists put together a display of 24 different types of jam and observed how many people were drawn to the display and ended up making a purchase. They then repeated the experiment but displayed only 6 different types of jam (using the same brands from the first experiment). With the smaller display they saw a 10x increase in the number of purchases. Despite the fact that a lot more people were drawn to the display with 24 jams, the ‘conversion’ was much bigger for the smaller display and the absolute number of purchases, in the end, was higher for the stand with less variety.

That is, limiting options is sometimes the best way to inhibit analysis paralysis. 

In the above examples, Diamond Digger Saga, by King, and Farmville 2, by Zynga, show only the 3 most popular offers, and hide more possible selections behind a button with ‘all offers’. By using this tactic they diminish the player’s cognitive load during the decision-making process but continue to offer lots of choices for players looking for other options. 

A lot of games also have a way to classify players into different cohorts according to how much money they’ve spent in a certain time frame, for example, in the last 90 days. By using the player’s previous preferences they can show fewer – but tailored – options to them, and increase the chance of a conversion.

Reciprocity

When something is given to someone, this someone feels obliged to return the favor. This ranges from invitations to parties and weddings, all the way to commercial relations. 

The best example of reciprocity in mobile games is probably the concept of giving gifts/lives between players. The person who receives the gift ends up feeling like they should return the favor. Which is why you will see many examples of games smartly including the option to ‘give back in the screen where you receive the gift.

This mechanic creates a virality cycle.

The above image is a supreme example of Reciprocity being used in Candy Crush. Don’t you want to send a life back to Anita?

In another experiment – the behavioral economics folk love experiments – they tried to elicit reciprocity in a restaurant. The hypothesis: if the waiter brings a little gift with the bill, patrons will feel obliged to give higher tips. The result was the following: 

When waiters gave 1 candy with the bill, this raised the amount given in tips by 3%.

When the waiters gave 2 candies, they garnered an increase of 14% in the tips.

When the waiter included 1 candy, complimented the customers, and gave them another candy (e.g: “you guys are really cool, here’s another candy”), this had an even bigger impact: a 23% increase in the tipped amount.

Social Validation

When one doesn’t know what would be the expected behavior in a given situation, one will look to others and try to imitate what they’re doing as a way to guide one’s actions.

The opinions of other people can have a great influence on our decision-making processes. 

Some examples of this:

• Waiting in queues at restaurants: Imagine walking up to two restaurants, one is completely empty and the other has a queue outside, without any knowledge of either restaurant, which one would you most likely decide to dine at?
• Product reviews: Buraco Jogatina has a 4.4 rating with over 200.000 reviews in Google Play and other Buraco games have an average score of 4, with less than 20.000 reviews. If you wanted to download a Buraco app, which one would you download?

Buraco Jogatina in Google Play: 4.5 rating with over 200.000 reviews and more than 5 million downloads. That’s social validation at its best! 

In a recent global study by Redbox, recommendations from friends and family ranked third in the list of factors that influence consumers the most when downloading an app.

Scarcity

We desire something more if this something is rare and scarce. We’re afraid of losing one-of-a-kind things or missing out on desirable situations (FOMO).

 

Scarcity generates a sense of urgency at the moment of purchase because it generates the fear of missing a chance or being left out. Scarce things become immediately more desirable than abundant ones. Some common examples of the tactic in use:

• Limited-time offers
• A limited quantity of a product

In the above example, Booking.com shows pop-ups saying that dozens of people are viewing the same ad for a hotel and that not too long ago someone made a reservation. This compels site users to close their deals faster in order to ensure no one else takes their desired booking.

In Free to Play games, Fallout Shelter uses the concept of rare cards. When a player buys a pack, they are guaranteed a rare card or better, which increases the conversion rate on the packs.

These are just a few of the widely used techniques and strategies being used in marketing and Free to Play games. To learn more about these and others, I strongly recommend these books and links:

• Dan Ariely — Predictably Irrational
• Robert Cialdini —  Influence: The Psychology of Persuasion
• An Enormous Guide to Pricing Psychology
• Articles by Om Tandon
• Deconstructor of Fun

 

Paula Neves is the CMO at Gazeus Games and a frequent contributor to Mobile Masterminds. Check out her interview here.