{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,6,5]],"date-time":"2026-06-05T09:11:30Z","timestamp":1780650690738,"version":"3.54.1"},"reference-count":72,"publisher":"Institute for Operations Research and the Management Sciences (INFORMS)","issue":"6","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Management Science"],"published-print":{"date-parts":[[2026,6]]},"abstract":"<jats:p>In player-versus-player video games, players\u2019 natural desire to win and avoid losing has created an opportunity for game developers to sell \u201cpay-to-win\u201d add-ons, digital items that give buyers a competitive advantage against other players. In this paper, we investigate the pricing and design of a pay-to-win add-on, its effect on the base game, and profit implications for the developer. When a large share of the players are less price sensitive and highly willing to buy the pay-to-win add-on, we find that, surprisingly, the developer may prefer not to introduce it. Further, when it is optimal to sell the add-on, the developer designs it to be less (more) powerful in games where players are highly (moderately) sensitive to losing. In practice, the developer may design rewards or penalties in the game to influence players\u2019 sensitivities to winning and losing, respectively. Our findings suggest that when selling a pay-to-win add-on, the developer ideally prefers players\u2019 loss sensitivity to be neither too high nor too low, whereas high win sensitivity tends to benefit the developer. The introduction of a pay-to-win add-on influences the optimal pricing and design of the base game. In particular, the developer decreases the base game price and may even sell it as a freemium. Despite the price reduction, investment in game quality may actually increase. From the players\u2019 perspective, our analysis shows that the introduction of a pay-to-win add-on can actually improve player surplus. In an extension of our core model, we show that the developer may prefer to customize player-to-player matching probabilities based on ownership of the pay-to-win add-on, making players who own it more likely to be matched against nonowners. However, such customization is not always optimal, and under some market conditions, the developer may optimally abstain from customizing matching probabilities. In another extension, we show that the developer may benefit from setting a negative price for the base game; counterintuitively, player surplus does not increase from negative pricing.<\/jats:p>\n                  <jats:p>This paper was accepted by Raphael Thomadsen, marketing.<\/jats:p>\n                  <jats:p>Supplemental Material: The web appendix is available at https:\/\/doi.org\/10.1287\/mnsc.2024.04610 .<\/jats:p>","DOI":"10.1287\/mnsc.2024.04610","type":"journal-article","created":{"date-parts":[[2025,9,26]],"date-time":"2025-09-26T16:16:49Z","timestamp":1758903409000},"page":"5131-5149","source":"Crossref","is-referenced-by-count":0,"title":["Pricing and Design of Pay-to-Win Add-Ons"],"prefix":"10.1287","volume":"72","author":[{"ORCID":"https:\/\/orcid.org\/0000-0002-4256-0001","authenticated-orcid":false,"given":"Mushegh","family":"Harutyunyan","sequence":"first","affiliation":[{"name":"Imperial Business School, Imperial College London, London SW7 2AZ, United Kingdom"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"ORCID":"https:\/\/orcid.org\/0000-0002-6545-5546","authenticated-orcid":false,"given":"Esma","family":"Koca","sequence":"additional","affiliation":[{"name":"Imperial Business School, Imperial College London, London SW7 2AZ, United Kingdom"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"109","reference":[{"key":"B1","doi-asserted-by":"publisher","DOI":"10.1037\/a0024908"},{"key":"B2","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1050.0399"},{"key":"B3","doi-asserted-by":"publisher","DOI":"10.1509\/jmkr.42.1.30.56883"},{"key":"B4","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.2014.2078"},{"key":"B5","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1080.0979"},{"key":"B6","doi-asserted-by":"publisher","DOI":"10.2307\/23042809"},{"key":"B7","doi-asserted-by":"crossref","unstructured":"Bandeira Rom\u00e3o Tom\u00e9 N, Klarkowski M, Gutwin C, Phillips C, Mandryk RL, Cockburn A (2020) Risking treasure: Testing loss aversion in an adventure game.\n                      Proc. Annual Sympos. Comput.Human Interaction Play\n                      (Association for Computing Machinery, New York), 306\u2013320.","DOI":"10.1145\/3410404.3414250"},{"key":"B8","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.22.2.209.16037"},{"key":"B9","doi-asserted-by":"publisher","DOI":"10.1287\/msom.2020.0866"},{"key":"B10","doi-asserted-by":"publisher","DOI":"10.1177\/0022243719825818"},{"key":"B11","unstructured":"Bracken CC, Skalski P (2006) Presence and video games: The impact of image quality and skill level.\n                      Proc. Ninth Annual Internat. Workshop Presence\n                      (Cleveland State University, Cleveland), 28\u201329."},{"key":"B12","doi-asserted-by":"publisher","DOI":"10.1037\/ppm0000035"},{"key":"B13","unstructured":"Buijsman M (2025) Global games market outlook: Key growth drivers and challenges for 2025-2027. Accessed April 25, https:\/\/newzoo.com\/resources\/blog\/global-games-market-update-q1-2025."},{"key":"B14","doi-asserted-by":"publisher","DOI":"10.1287\/msom.2017.0618"},{"key":"B15","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.2013.1738"},{"key":"B16","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.2020.3748"},{"key":"B17","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.2016.0976"},{"key":"B18","doi-asserted-by":"publisher","DOI":"10.1016\/S0047-2727(97)00016-9"},{"key":"B19","doi-asserted-by":"publisher","DOI":"10.1080\/15252019.2012.10722192"},{"key":"B20","unstructured":"de Souza (2023) Understanding player spending habits. Accessed September 2025, https:\/\/medium.com\/agile-game-development\/understanding-player-spending-habits-f547f9140cf0."},{"key":"B21","unstructured":"Deloitte (2019) Plateauing at the peak. The state of the smartphone. Mobile consumer survey, Deloitte, London."},{"key":"B23","doi-asserted-by":"publisher","DOI":"10.1287\/isre.2021.1017"},{"key":"B24","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1060.0549"},{"issue":"2","key":"B25","first-page":"585","volume":"120","author":"Ellison G","year":"2005","journal-title":"Quart. J. Econom."},{"key":"B26","doi-asserted-by":"publisher","DOI":"10.7551\/mitpress\/12243.001.0001"},{"issue":"3","key":"B27","first-page":"170","volume":"10","author":"Gabor A","year":"1961","journal-title":"J. Roy. Statist. Soc. Ser. C: Appl. Statist."},{"key":"B28","doi-asserted-by":"publisher","DOI":"10.1007\/978-981-4560-26-9_3"},{"key":"B29","doi-asserted-by":"publisher","DOI":"10.1111\/poms.12400"},{"key":"B30","doi-asserted-by":"publisher","DOI":"10.1111\/poms.12831"},{"key":"B31","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.1080.0390"},{"key":"B32","doi-asserted-by":"publisher","DOI":"10.1287\/isre.2018.0812"},{"key":"B33","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.2021.1323"},{"key":"B34","doi-asserted-by":"publisher","DOI":"10.1016\/j.chb.2017.01.042"},{"key":"B35","doi-asserted-by":"publisher","DOI":"10.1016\/S0022-4359(01)00057-4"},{"key":"B36","doi-asserted-by":"publisher","DOI":"10.1111\/poms.12647"},{"key":"B37","doi-asserted-by":"publisher","DOI":"10.1111\/poms.13035"},{"key":"B38","doi-asserted-by":"publisher","DOI":"10.1111\/poms.13608"},{"key":"B39","doi-asserted-by":"publisher","DOI":"10.1111\/poms.13772"},{"key":"B40","doi-asserted-by":"publisher","DOI":"10.1093\/cercor\/bhs259"},{"key":"B41","doi-asserted-by":"publisher","DOI":"10.1016\/j.chb.2019.07.017"},{"key":"B42","doi-asserted-by":"publisher","DOI":"10.1509\/jmr.11.0005"},{"key":"B43","doi-asserted-by":"publisher","DOI":"10.1177\/106169341001900405"},{"key":"B44","doi-asserted-by":"publisher","DOI":"10.1177\/0092070303031003003"},{"key":"B45","doi-asserted-by":"crossref","unstructured":"Lee SY, Sudhir K, Uetake K (2025) Time-money choices in virtual environments: A structural approach to player monetization. Preprint, submitted May 7, https:\/\/doi.org\/10.2139\/ssrn.5231072.","DOI":"10.2139\/ssrn.5231072"},{"key":"B46","doi-asserted-by":"publisher","DOI":"10.1177\/001088049703800223"},{"key":"B47","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.2022.4510"},{"key":"B48","doi-asserted-by":"publisher","DOI":"10.1016\/j.ijinfomgt.2012.12.002"},{"key":"B49","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.2023.0007"},{"key":"B50","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.3.4.288"},{"key":"B51","doi-asserted-by":"publisher","DOI":"10.1016\/0022-0531(78)90085-6"},{"key":"B52","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1050.0400"},{"key":"B53","doi-asserted-by":"publisher","DOI":"10.1037\/a0019440"},{"key":"B54","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.2013.0797"},{"key":"B55","unstructured":"RocketBrush (2024) Most popular video game genres in 2024: Revenue, statistics. Accessed January 1, 2025, https:\/\/rocketbrush.com\/blog\/most-popular-video-game-genres-in-2024-revenue-statistics-genres-overview."},{"key":"B56","volume-title":"Level Up! The Guide to Great Video Game Design","author":"Rogers S","year":"2014"},{"key":"B57","doi-asserted-by":"publisher","DOI":"10.1007\/s11031-006-9051-8"},{"key":"B58","unstructured":"Sensor Tower (2025) State of mobile gaming. https:\/\/sensortower.com\/state-of-gaming-2025."},{"key":"B59","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.2018.1109"},{"key":"B60","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1120.1603"},{"key":"B22","unstructured":"Statista\n                      (2021) Number of video gamers worldwide in 2021, by region (in millions).\n                      Statista\n                      (June 23), https:\/\/www.statista.com\/statistics\/293304\/number-video-gamers\/."},{"key":"B61","doi-asserted-by":"publisher","DOI":"10.1509\/jmkg.71.3.052"},{"key":"B62","unstructured":"Sullivan M (2020) The spending habits of MMO gamers. Accessed January 1, 2025, https:\/\/www.accrediteddebtrelief.com\/blog\/mmo-money-mmo-problems\/."},{"key":"B63","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.1040.0058"},{"key":"B64","doi-asserted-by":"publisher","DOI":"10.1509\/jmkr.46.2.135"},{"key":"B65","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1070.0807"},{"key":"B66","doi-asserted-by":"crossref","unstructured":"Tregel T, Schwab MC, Nguyen TTL, M\u00fcller PN, G\u00f6bel S (2020) Costs to compete\u2014Analyzing pay to win aspects in current games.\n                      Joint Internat. Conf. Serious Games\n                      (Springer, Berlin), 177\u2013192.","DOI":"10.1007\/978-3-030-61814-8_14"},{"key":"B67","unstructured":"Vorderer P, Hartmann T, Klimmt C (2003) Explaining the enjoyment of playing video games: The role of competition.\n                      Proc. Second Internat. Conf. Entertainment Comput\n                      (Carnegie Mellon University, Pittsburgh), 1\u20139."},{"key":"B68","doi-asserted-by":"publisher","DOI":"10.1016\/j.jretai.2003.09.004"},{"key":"B69","doi-asserted-by":"publisher","DOI":"10.1016\/j.intmar.2013.04.001"},{"key":"B70","doi-asserted-by":"publisher","DOI":"10.1111\/poms.13502"},{"key":"B71","doi-asserted-by":"publisher","DOI":"10.1371\/journal.pone.0232780"},{"key":"B72","unstructured":"Zollner (2023) Call of duty warzone players are complaining about the introduction of \u2018pay to win\u2019 content. Accessed September 2025. https:\/\/www.ign.com\/articles\/call-of-duty-warzone-players-are-complaining-about-the-introduction-of-pay-to-win-content."}],"container-title":["Management Science"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/pubsonline.informs.org\/doi\/pdf\/10.1287\/mnsc.2024.04610","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2026,6,5]],"date-time":"2026-06-05T08:51:50Z","timestamp":1780649510000},"score":1,"resource":{"primary":{"URL":"https:\/\/pubsonline.informs.org\/doi\/10.1287\/mnsc.2024.04610"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2026,6]]},"references-count":72,"journal-issue":{"issue":"6","published-print":{"date-parts":[[2026,6]]}},"alternative-id":["10.1287\/mnsc.2024.04610"],"URL":"https:\/\/doi.org\/10.1287\/mnsc.2024.04610","relation":{},"ISSN":["0025-1909","1526-5501"],"issn-type":[{"value":"0025-1909","type":"print"},{"value":"1526-5501","type":"electronic"}],"subject":[],"published":{"date-parts":[[2026,6]]}}}