Virtual currencies in online gaming increase the willingness to pay for loot boxes: an experimental analysis

This study investigates how in-game virtual currencies influence consumer spending behaviour. In an incentivized randomized controlled trial with 753 UK participants, we estimate the willingness-to-pay (WTP) for loot boxes represented as risky and ambiguous lotteries. We test the effects of virtual currencies, money illusion, and cognitive-demanding (non-intuitive) exchange rates, three practices commonly used to sell loot boxes. Our results show that WTP is significantly higher when transactions are conducted in virtual currencies with a 1:1 exchange rate compared to British pounds, contributing to the debate on the neutrality of virtual currencies and experimental currency units. Moreover, participants in our study are affected by money illusion distortions, regardless of the exchange rate’s intuitiveness. However, we find no evidence that non-intuitive exchange rates affect participants’ WTP compared to intuitive exchange rates of comparable size. These findings highlight the behavioural distortions induced by common monetization practices in games and provide empirical support for the European Commission’s call for stricter regulation of virtual currencies in digital environments.