Repeated Gambles with Bundled Options: A Behavioural Model of Probability Misperception

Abstract: This paper explains the mechanics of toy vending machines in mobile games using prospect theory and naivety. It demonstrates that naive players who perceive independent probabilities in a history-dependent way can be induced to play for longer than optimal, thereby increasing the game provider’s profits. Free initial rounds can entice naive players to start a game that will ultimately harm them. Bundling two rounds together increases the likelihood that naive players continue to play due to their probability misperception. Numerical examples further support the feasibility and profitability of this mechanism.

Recommended citation: https://misaka-19090.github.io/files/Repeated_Gambles.pdf