Loot Box Purchase Decisions in Digital Business Models: The Role of Certainty and Loss Experience

Abstract

Game providers are increasingly employing and selling loot boxes, which can be considered virtual goods that consist of further virtual goods on a randomized basis. As such, game providers can foster profitability without impeding user experience. Drawing on prospect theory, we investigate ideas for the design of loot box menus to optimize revenue generation and user well-being. By conducting a contest-based online experiment with 159 participants, our analyses reveal that including certain (vs. uncertain) content in loot boxes can influence users’ purchase behaviors and thus increase revenues. Moreover, this effect increases when participants previously experienced a loss. Thus, our findings demonstrate that game providers can profit from offering certain content in loot boxes.