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Beliefs that Entertain

Author

Listed:
  • Gandhi, Ashvin
  • Giuliano, Paola
  • Guan, Eric
  • Keefer, Quinn
  • McDonald, Chase
  • Pagel, Michaela
  • Tasoff, Josh

Abstract

Economic research on entertainment is scant despite its large share of time use. We test economic theories of belief-based utility in the context of video-game engagement. Using data on 2.8 million matches from League of Legends, we find evidence supporting reference-dependent preferences, loss aversion, preferences for surprise and suspense, preferences for clumped surprise, and flow theory from psychology. We then leverage our estimated model and an evolutionary algorithm to find the information-revealing process that maximizes player engagement. We find that the optimal version of the game has increased game play equivalent to 43% of the winner-loser gap.

Suggested Citation

  • Gandhi, Ashvin & Giuliano, Paola & Guan, Eric & Keefer, Quinn & McDonald, Chase & Pagel, Michaela & Tasoff, Josh, 2024. "Beliefs that Entertain," CEPR Discussion Papers 18952, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18952
    as

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    Other versions of this item:

    • Ashvin Gandhi & Paola Giuliano & Eric Guan & Quinn Keefer & Chase McDonald & Michaela Pagel & Joshua Tasoff, 2024. "Beliefs that Entertain," NBER Working Papers 32295, National Bureau of Economic Research, Inc.
    • Gandhi, Ashvin & Giuliano, Paola & Guan, Eric & Keefer, Quinn & McDonald, Chase & Pagel, Michaela & Tasoff, Joshua, 2024. "Beliefs That Entertain," IZA Discussion Papers 16877, Institute of Labor Economics (IZA).

    References listed on IDEAS

    as
    1. Björn Bartling & Leif Brandes & Daniel Schunk, 2015. "Expectations as Reference Points: Field Evidence from Professional Soccer," Management Science, INFORMS, vol. 61(11), pages 2646-2661, November.
    2. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    3. Devin G. Pope & Maurice E. Schweitzer, 2011. "Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes," American Economic Review, American Economic Association, vol. 101(1), pages 129-157, February.
    4. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Belief-based utility; Reference-dependent utility; Suspense and surprise; Loss aversion; Video games; Entertainment design;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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