Behavioral Market Design for Online Gaming Platforms

Ala Avoyan (), Robizon Khubulashvili () and Giorgi Mekerishvili ()
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Ala Avoyan: Department of Economics, Indiana University, Bloomington, Indiana 47405
Robizon Khubulashvili: Department of Economics, University of San Francisco, San Francisco, California 94117
Giorgi Mekerishvili: AlixPartners LLP, Boston, Massachusetts 02110

Management Science, 2025, vol. 71, issue 6, 4552-4565

Abstract: In this paper, we investigate market design for online gaming platforms. We ask what motivates people to continue participation—success or failure. Using data from an online chess platform, we find strong evidence of heterogeneous history-dependent stopping behavior. We identify two behavioral types of people: those who are more likely to stop playing after a loss and those who are more likely to stop playing after a win. We propose a behavioral dynamic choice model in which the utility from playing another game is directly affected by the previous game’s outcome. We estimate this time nonseparable preference model and conduct counterfactual analyses to study alternative market designs. A matching algorithm designed to leverage stopping behavior can substantially alter the length of play.

Keywords: time nonseparable preferences; platform design; online gaming; history-dependent stopping behavior; chess.com (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:6:p:4552-4565

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