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the market clearly doesn't think mobile games are directly worth enough to pay for making them I would argue that this pattern is an irrationality that must be

the market clearly doesn't think mobile games are directly worth enough to pay for making them I would argue that this pattern is an irrationality that must be corrected with force [1]: When faced with a choice of selecting one of several available products (or possibly buying nothing), according to standard theoretical perspectives, people will choose the option with the highest cost–benefit difference. However, we propose that decisions about free (zero price) products differ, in that people do not simply subtract costs from benefits and perceive the benefits associated with free products as higher. That is, users systematically spring for games with lower cost-benefit tradeoffs simply because they are offered for free. While this would be economically infeasible for game developers, they've figured out how to take advantage of other psychological breakdowns to extract revenue. On a larger scale I'm not sure this makes users as happy as they could be. 1) http://web.mit.edu/ariely/www/MIT/Papers/zero.pdf http://web.mit.edu/ariely/www/MIT/Papers/zero.pdf

ataggart 12y ago
>That is, users systematically spring for games with lower cost-benefit tradeoffs simply because they are offered for free. Except that's not what the paper says. It just notes that the decision-making process that goes on in people's heads doesn't just include the monetary cost (duh), and that when one option is "free" some other non-monetary factor is revealed (e.g., removing the mental cost of even having to do a cost/benefit analysis). That said, I'm troubled by your notion that when people's actual behaviour does not conform to a model, the problem is with the people.
- siglesias 12y ago
  I'm not saying that the users know that free options have lower cost-benefit tradeoffs, but in reality, experiments show that they do, specifically the on I cited. But you raise an interesting point. It could well be that the "mental cost of even having to do a cost/benefit analysis" is too high for many people to consider paid options. That reenforces the proposal that Apple should wean users off of low (even negative) utility free options and train them to make such evaluations efficiently, the way many of us who are used to paying for software can. Again, all of this predicated on the thesis that benefit - cost - mental cost (which improves as we learn how to evaluate software) of many paid apps is higher than the average benefit of free apps. As for my notion that people's actual behavior doesn't conform to a model of rationality, perhaps we should agree to disagree. There is plenty of research to suggest that people are bad at making calculations and require intervention.
  - ddalex 12y ago
    Actually, you bring up an interesting point - perhaps Apple already does wean off users from free options. Perhaps this is a move directed at consumers and not game producers. Apple stands to gain nothing if users don't pay up - 30% of 0 is 0. Therefore they need to eliminate 0-dollar items from the market - but you can't go straight and do it because it would cause an uproar. So they make it infeasible for game developers to offer free games, and will extract the selling commission from the resulting non-zero priced games.

ataggart 12y ago

>That is, users systematically spring for games with lower cost-benefit tradeoffs simply because they are offered for free. Except that's not what the paper says. It just notes that the decision-making process that goes on in people's heads doesn't just include the monetary cost (duh), and that when one option is "free" some other non-monetary factor is revealed (e.g., removing the mental cost of even having to do a cost/benefit analysis). That said, I'm troubled by your notion that when people's actual behaviour does not conform to a model, the problem is with the people.

siglesias 12y ago
I'm not saying that the users know that free options have lower cost-benefit tradeoffs, but in reality, experiments show that they do, specifically the on I cited. But you raise an interesting point. It could well be that the "mental cost of even having to do a cost/benefit analysis" is too high for many people to consider paid options. That reenforces the proposal that Apple should wean users off of low (even negative) utility free options and train them to make such evaluations efficiently, the way many of us who are used to paying for software can. Again, all of this predicated on the thesis that benefit - cost - mental cost (which improves as we learn how to evaluate software) of many paid apps is higher than the average benefit of free apps. As for my notion that people's actual behavior doesn't conform to a model of rationality, perhaps we should agree to disagree. There is plenty of research to suggest that people are bad at making calculations and require intervention.
- ddalex 12y ago
  Actually, you bring up an interesting point - perhaps Apple already does wean off users from free options. Perhaps this is a move directed at consumers and not game producers. Apple stands to gain nothing if users don't pay up - 30% of 0 is 0. Therefore they need to eliminate 0-dollar items from the market - but you can't go straight and do it because it would cause an uproar. So they make it infeasible for game developers to offer free games, and will extract the selling commission from the resulting non-zero priced games.