After talking about Lovecraft, today I want to talk about loss aversion in video games.

In recent years, the classic view of economics has been strongly challenged. The internal problems of the theory were already present in previous times but never as now, thanks to the cognitive studies, some fundamental elements are contested and revised. We are therefore witnessing a transition from what is an economy that claims to be, at the same time, descriptive and normative (rational choice theory) to an economy that seeks to play a more descriptive role, trying to collect data through experiments and to study them in order to best describe the behavior of the human being.

There are many systematic violations that men make every day with respect to classical economic theory (which provides for a fully rational behavior of the actor in question). What, however, I will want to examine is probably the most important and exploited systematic error in modern culture, namely theloss aversion. This type of error consists in perceiving the losses in a much more negative way (about double), compared to the gains. Trying to explain it with an example:

Suppose we have an object x, which is not owned by anyone. Now suppose we have two groups, A and B, made up of people. This object is given to one of the two groups, let's suppose group A. Then both groups are asked to price the good x: A to sell it, B to buy it. The result, documented by many experiments, such as the one conducted by Kahneman, Knetsch and Thaler (1991), is that the price of group A will be about double that of group B. Group B, not owning the object, it is not under the effect of loss aversion and therefore will give a price about half the lower. Group A, since the object is in its possession, and therefore subject to loss aversion, will perceive detachment from that same object as more painful. This is called endowment effect.

On the basis of this phenomenon, many elements and many sectors have had to modify their marketing strategies and design of their products. The videogame sector does not hold back either, where many games use the principle of aversion to losses in order to influence the player, affecting both the atmosphere of the game and the technical mechanics.
In light of this, the interest of this work is to show how loss aversion strongly influences the design of a video game, that is, what is called in jargon game design.

Let's take an iconic game like the Monopoli. Anyone who has undertaken a session of this pastime has probably felt a strong sense of frustration at being forced to pay another player or having to sell their hotels.
The sense of stress experienced is attributable to what is the aversion to losses, in fact one finds oneself forced to lose something gained and this, combined with the inability to control the movements of one's piece, causes a strong sense of dissatisfaction. 

Another game of the same genre is Catan, a strategic game where you have to conquer territories and expand your faction. Within the game, as in the Monopoli, it is possible to erect buildings, with the difference that buildings can never be destroyed and, once built, they will remain forever. This relieves the player of the stress caused by loss aversion, making the game more enjoyable and palatable. For these reasons the game, in its niche, has had considerable success and has brought players not accustomed to the genre (casual gamers), unlike the Monopoli, where casual gamers aren't tempted to try again.

Another example is the game Dark SOuls, game with a tense and gloomy setting, where the player will be put to hard difficulty by a punitive game system and by a general degree of very high difficulty, which will lead him to die repeatedly even to overcome a single dungeon (this game has given life to a new videogame genre, called soulslike, of obvious inspiration, and which have experienced a huge spread recently).
Just the mechanics of death exploits the principle of aversion to losses. Every time a monster is killed it generates "souls", the game currency, which are used to enhance your character by increasing his characteristics or buying items. Furthermore, the "souls" are not in large quantities and must be well dosed to obtain a balanced character in order to continue the game. Whenever a character dies, the "souls" fall to the spot where the player died. The player resurrects in a checkpoint and can recover the "souls" by returning to the point where he died previously. However, if he dies trying to collect them, the souls will disappear forever, causing a terrible sense of self, frustration and anxiety.
In this case, this mechanic is used to make the atmosphere of the game even more oppressive, generating tension in the player and prompting the latter to improve their strategies and skills, making players more likely to make calculated choices instead of acting impulsively. .

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A feature of games of this genre is also the possibility of having “infinite” inventories. As the game progresses the items that are obtained become stronger and stronger, causing the previous items to become obsolete or completely useless. They can be sold for cash, which can be spent to advance in the game. The most logical choice therefore seems to be to sell useless items in order to get money but this, in the vast majority of players, does not happen. In fact, there is a tendency to keep all the objects obtained along the way, citing reasons such as "it could be useful in the future", something that every player knows is not true. This choice is explained by the experiment conducted by Jiwoong Shin and Dan Ariely of Duke University. Three doors were placed, the opening of which involved a certain choice, one of which was decidedly more convenient than the others. Opening one of these doors did not cause the others to disappear, unless a door was ignored for x rounds in a row. Once the most convenient door has been identified, according to the dictates of classical economics, the actor should have always followed this path, since it is the most rational. It was noted, however, that the actors tended, when they knew they were losing one of these doors, to open them, in order not to detach themselves from something possessed, despite this choice having no rational basis. This is the same reasoning that governs the tendency of players to keep objects obtained but useless.

However, the situation that arises with the games that are called is different survival horror, as an example The Last Of Us. In these games the aim is to survive in a post apocalyptic world, where zombies or infected are a constant threat, in an environment full of the dark tones of a post-apocalyptic world. The weapons, the ammunition, the medkits, the objects necessary for the improvement of one's equipment, are scattered throughout the map. They are difficult to find and in small quantities. As if that were not enough, the inventory is made up of a few spaces, making any choice that involves having to leave behind some object or having to decide to give up an object owned in for others found on the street painful (especially at the highest levels of difficulty)[1]. In this case the loss aversion mechanism acts in these choices, creating a constant sense of oppression and tension.

A final example is Portal, a puzzlegame, where, through the creation of portals, it will be possible to reach the end of the level. It is not difficult to find cubes scattered around the game which, used in the most imaginative of ways, will be fundamental to progress with the story.
In one level, however, there is a special cube, where there is a little heart, called Companion Cube, as it will be necessary to carry it for the entire duration of the level and “take care of it”.
In the final part of the scenario, in order to continue with the game, it will be necessary to give up the cube, throwing it in an incinerator, causing a feeling of loss and sadness in the player.
What this time also comes into play at this level is what is called the framing effect, according to which based on how a question is presented to us, our choice would be influenced by the way of presentation itself (Asian disease, Tversky, Kahneman, 1981 ). During the journey, information and advice are given to the player (in the next figure you can see how it is recommended to give "love" to the cube). This causes the player to create a kind of emotional legal with the cube, given both by the messages and by the uniqueness of the cube. The sadness generated at the moment of separation is due, in fact, to the combined effect of the aversion to losses and the framing effect, which pushes us to become attached to this unusual object. But let's assume that, in another level, the cube has a skull and the messages that are conveyed to us are of a negative nature, a cube that bullies the other cubes or performs any other evil deed. Would we experience the same feeling of sadness and abandonment? Or wouldn't it weigh on us? On the basis of how the object is presented to us, the emotions that the same game can arouse change substantially. Although the choice, in this type of games, is practically obligatory, knowing how to exploit these subtle psychological mechanisms allows developers to give a particular tone to the environment and to guide the player towards the emotions that they would like to arouse.

Through these examples, I tried to show how the success of a good product, at least in the videogame field, depends on the use or not of these types of psychological devices, in order to exploit people's systematic errors. On the other hand, however, not taking into account or incentivizing these types of aspects too urgently can lead to frustration and the failure of a game. One example is the famous video game League of Legends, where, in a 5 v 5 arena it is necessary to get to the enemy base and blow up the Nexus to win the game. There is a ranking system, where it is necessary to accumulate points in order to climb the ranking. The points are calculated through an algorithm (MMR-Matchmaking Rating). Due to a bad algorithm, the game is too punishing for many players, forced to lose more points than those earned per single game[2]. In this case, loss aversion plays a fundamental role since the loss of a game will be perceived in a much greater way than the respective victory. This leads many players to a marked level of stress that can result, in the most extreme cases, in aggressive behavior (throwing objects, breaking game peripherals) or abandoning the game.[3]. From this point of view, therefore, knowing how to apply the principles of cognitive economics can make the difference from producing a mediocre game or a good game, an excellent game from a masterpiece, and must be an integral part of the game design of each video game.


[1] In many video games you can choose the difficulty level. In The Last Of UsAt higher levels, in addition to dying much easier, it becomes more difficult to find objects, and this makes the feeling of “leaving something behind” even more pronounced.

[2] If with a win I get 15 points and with a defeat I lose 18, it means that, to keep going up, the win-loss ratio will be about 2: 1, where the points obtained from a victory are largely covered by a defeat.

[3] The game in question is very successful but this aspect is one of the most criticized in the community.