Analysis: Zombies, Barbarians And Loss Aversion

[Psychologist and gamer Jamie Madigan writes for Gamasutra on the subtleties of "loss aversion" -- and why the way a message is framed can lead to big changes in what gamers are willing to pay for.] How can publishers get more people to buy an Xbox Live Arcade or Playstation Network game after trying the trial version? And how can MMOs get wayward customers to resubscribe? Let me glue on my goatee and practice my maniacal laugh a few times, and then I’ll tell you my ideas. Zombie Outbreaks and Loss Aversion First, let me ask you a couple of hypothetical questions made famous in certain circles by two guys named Amos Tversky and Daniel Kahneman: "Imagine that the U.S. is preparing for a zombie outbreak, which is expected to kill 600 people. Two alternative programs to combat the outbreak have been proposed. Assume that the exact scientific estimate of the consequences of the programs are as follows: If Program A is adopted, 200 people will be saved. If Program B is adopted, there is 1/3 probability that 600 people will be saved, and 2/3 probability that no people will be saved. Which of the two programs would you favor?" Okay, so Tversky and Kahneman actually phrased the question in terms of an Asian flu and not a zombie outbreak, but I figure we would stick to territory more familiar to gamers. That said, which of the two programs would you pick: Program A or Program B? The researchers found that most people they asked chose Program A: 72% versus the 28% who chose B. So then the researchers presented the same hypothetical situation but with the following options: "If Program C is adopted 400 people will die. If Program D is adopted there is 1/3 probability that nobody will die, and 2/3 probability that 600 people will die. Which of the two programs would you favor?" Which of these new options would you pick? This time most of the experimental subjects picked Program D by a wide margin — 78% versus the 22% for Program C. The thing is, both sets of choices are identical. Look closely. Programs A and C both result in 400 of the 600 people dying and 200 living. Programs B and D both have a 1/3 chance of saving everyone and a 2/3 chance of killing everyone. The only difference is that Programs A and B are phrased in terms of lives saved and Programs C and D are described in terms of lives lost. People were made much more willing to gamble with the lives of 600 people simply by having the dilemma framed in terms of losses. Why? Tversky and Kahnaman said this points to "loss aversion," which is one my favorite kinks in the human brain. In short, loss aversion is our willingness to go to great lengths to avoid losses –much farther than we’ll go to get an equivalent gain. In other words, losing $10 is more painful than gaining $10 is pleasurable, or "losses loom larger than gains." Simple Changes to Framing Mean Big Changes in Attitudes Consider another quick question and suppose that a company were offering two subscription plans for an online MMORPG. - Option A gives you a $5 credit - Option B lets you avoid a $5 monthly surcharge Assuming both options were otherwise identical, which do you think would be more popular? In all likelihood it would be Option B, since people prefer not losing $5 to gaining a $5 discount. This despite the fact that the monthly costs would be identical. This is also one of the reasons you’ll more often see "$10 late registration fee" advertised instead of "$10 discount for early registrations" for events where the organizers want you to register early. Here, Take This. Now Pay for it or Lose It So what does this have to do with getting people to buy a Xbox Live Arcade or Playstation Network game after they play the trial version? Right now, it’s not uncommon for such trials to pop up a message saying something to the effect of "You would have just gotten an achievement/trophy just now! Buy the full game to get it!" And that’s pretty good. Pretty sneaky. Pretty psychological. Because we obviously like getting things we value, and a lot of us value achievements and trophies. But the phenomenon of loss aversion suggests a way to be better, more sneaky, more psychological. Instead of saying that you will get the achievement or trophy if you buy the game, actually give it to them and then say you’re going to take it away if they DON’T buy the game. And I mean really give it to them – have it show up in their gamer score and on their achievement/trophy list. Just take it away if they exit the trial version of the game without buying the full thing, and make sure they know it. I guarantee that your conversion rate would go up if you tried something like this. because while people like the promise of getting something, they hate the promise of losing it way more. Hey, I know that there's logistical issues and maybe Microsoft or Sony place restrictions on how these things are handled. But I'm the idea man here; I'm sure some of you guys can figure out how to put in place. But just in case you were wondering, there are other ways to make use of loss aversion, as Funcom and everyone's favorite barbarian recently showed us. Conan the Loss Averse Barbarian Many players who had unsubscribed from the Age of Conan massively multiplayer online game recently got an e-mail from the publisher stating, in part: "Dear customer, Thank you for playing Age of Conan. As part of our maintenance your account is now flagged to have your characters below level 20 deleted as part of maintenance. Please re-activate your account now to ensure that your characters progress and names stay intact." In other words, "come back or your low level alt (not to mention your bank and your mule characters) gets taken out back and shot." I'd be fascinated to see what this did to Age of Conan's resubscription rate. If I were in charge of these things at Funcom, I would have randomly separated that mailing list into two groups and sent the above e-mail to the first half. The second half would have gotten something along the lines of: "Dear customer, Thank you for playing Age of Conan. As part of our maintenance your account is now flagged to have your characters below level 20 saved as part of maintenance if you resubscribe. Please re-activate your account now to ensure that your characters progress and names stay intact." And then I would have looked at the differences in resubscription rates between those whose message was phrased in terms of losing their character and those whose message talked about saving it. Which of those two messages would you, as a MMO player, respond to more strongly? My guess would be the former, especially if you weren't the handsome and well educated person you are on account of reading about loss aversion here. [Jamie Madigan, Ph.D. is a psychologist and gamer who explores why players and developers do what they do by studying the overlap between psychology and video games at The Psychology Of Games website. He can be reached at [email protected].]