Dynamic Incentive Schemes. Many games include incentive schemes that provide players with a series of goals related to progressing through game levels and content. These incentive schemes are dynamic in that players need to exert effort over multiple periods to achieve goals and earn rewards. Rewards range from items that provide symbolic or psychological value such as levels, badges, and trophies to items that provide tangible value such as new characters, aesthetic items (skins) and in-game currency. While these reward systems are similar in spirit to the loyalty-based rewards popular in traditional marketing categories, the rewards systems are so prevalent in gaming contexts that they have spawned the term “gamification” (Xxxxx and Xxxxxxxxxx 2013; Xxxx 2012). The marketing literature has devoted significant attention to the study of loyalty programs. One relevant aspect of this literature is work that investigates how long-term incentives can influence current and future consumption decisions (Xxxxx 2004; Xxxxxxx et al. 2012). Xxxxx (2004) models consumer response to a reward program using an individual level dynamic optimization model. This model explicitly considers how expectations of future rewards motivate current consumption. The rewards systems featured in games often use similar dynamic structures as in traditional marketing contexts. Similar to how consumers earn rewards by accumulating points based on past spending, game players earn rewards by accumulating in-game points. The loyalty program literature has noted that the accumulation of points can act as a motivator for consumer activity. This “points based” effect has been termed “points pressure” (Xxxxx 2004; Xxxxxx and Xxxxxx 2005; Xxxxxxx et al. 2012). Points pressure, also known by the goal gradient effect in the behavioral literature, suggests that as consumers get closer to a pre- specified consumption goal, their motivation to achieve the goal becomes stronger (Xxxxxx, Xxxxxxxx, and Zheng 2006; Xxxxx and Drèze 2006). Many researchers have been able to identify the existence of “points pressure” in loyalty programs with dynamic incentives (Xxxxxx and Neslin 2005; Xxxxxx, Xxxxxxxx, and Xxxxx 2006; Xxxxx 2004). Using grocery chain store data Xxxxxx and Neslin (2005) found that as consumers get closer to rewards they increase their purchasing rate. Xxxxxx, Xxxxxxxx, and Xxxxx (2006) documented and analyzed the points pressure effect using multiple methods (field experiments, secondary customer data, etc.). In the ...
