The Lottery – Why People Favor Worse Odds – Extra Credits

In October, perhaps the greatest experiment in player psychology to date occurred.
It happened very quietly, without much notice being taken of it by the video game community
because it didn’t happen in our realm.
It happened in the world of lotto.
[Intro music]
As James writes this, the first great result of this experiment is about to play out.
We may do a follow up episode to this one after we see the results
but today I want to talk about the thinking and the player psychology that drove the experiment,
rather than talk about it’s eventual validity.
But for any of you who want to know how this all turns out,
since this episode will come out long after we reap our first major date from the experiment,
simply look up the Powerball results in the first week of January 2016.
So what experiments am I talking about?
I am referring to the great odds change in American lotto, specifically Powerball.
You see, back in October of 2015, the Multi-State Lottery Commission,
the folks who run what is essentially the largest lottery in The United States,
changed the odds of winning from one in a hundred and seventy-five million
to an astronomical one in two-hundred and ninety-two million.
Not because they weren’t making enough money at the current odds but because,
and here’s where it gets interesting,
they believed more people would play if they made the odds worse.
Now, to understand the reasoning here and why the data they have supported that theory,
we have to talk a little bit about how Powerball works.
Powerball is a simple lotto where you pick five numbers and then a sixth bonus number
and, if all six of your numbers match, you win the jackpot.
But, here’s the important part: if no one wins, the jackpot is carried over
and some of the money players spent on the game is rolled into the next jackpot.
So, as long as there’s no winner, the jackpot continues to grow.
By crashing the odds of someone actually hitting the jackpot,
the Lottery Commission basically ensured that the jackpots would grow to higher and higher numbers.
And here’s the thing that really drove them:
They saw that the higher the jackpot was, the more people would decide to play.
And since higher jackpots lead to more players,
jackpots should follow an exponential curve where,
as the jackpots rise, more players come in, putting more money into the system
and creating even bigger jumps in the jackpot than previously seen.
But this led to a conundrum because once you hit a certain number of players
you’re statistically almost guaranteed to have at least one winner.
And when somebody wins the jackpot, the jackpot resets to its baseline starting amount.
Meaning that in the past, just when Powerball were starting to see the really astronomical part of
the exponential curve of player growth, somebody would win.
And interest would die down, and the process would start over.
So their solution was simple: tank the odds.
If you drop the odds of winning substantially,
you push the statistical near-certainty of a winner a few weeks down the line.
Thereby letting you really rake in the benefits of your exponential player curve.
And therein lies the great question:
in a system like this, at what point does lowering the odds actually discourage players?
Is there such a point above zero?
So long as there’s at least one winner so people can think it might be them
does it matter how irrational playing the game is?
And that’s a deeply important question for game design
Because very often, we like to treat players, especially in incentive design, as rational actors.
If I give you x experience (XP) for killing Monster A, and x+5 XP for killing Monster B
and they’re both the same difficulty, I expect the player to gravitate toward killing Monster B.
And if I give players, let’s say, 100XP for beating Monster C
and 130XP for beating Monster D, but Monster D is three times as difficult to beat as Monster C
I expect players to favor the efficient route and and fight Monster C.
(Which is why the Destiny loot cave happened.)
Although, there will be a few outliers who wanna take on Monster D just for the challenge
which, in video games, becomes its own sort of reward so we can discount those outliers.
But what this Lotto experiment is saying is that, that might not actually be the correct calculus.
So long as people think they have a chance at winning,
they actually might opt to take a 100 to 1 shot on getting 50XP
rather than a guaranteed 1XP win, regardless of how interesting or banal the challenge might be.
They just need to know about the 50XP payout.
And while you can argue video games rarely come down to these sort of strict odds calculations
the underlying principle remains.
It’s the idea of the job versus the big score.
This is especially prevalent in MMOs but it’s relevant in all incentive-based games.
And the suggestion here is that we should be making more encounters that feel like a big score,
even if they’re way worse to grind,
as opposed to the slow but steady job-like mob and quest systems that many games use today.
But there’s one other factor to consider
when thinking about what the Powerball experiment might mean for games
and no, it’s not the extrinsic real financial reward of Powerball.
But rather, what it represents.
When people hear about winning 400 or 500 or 800 million dollars,
when they hear about that long-elusive billion dollar prize,
they think, “if I win this one thing, I’ll never have to win anything ever again.”
Which, basically, isn’t an option in a video game.
We can’t offer a prize that’s so big,
no matter how bad the odds,
that if you won it, you’d win the game and you wouldn’t have to do anything ever again.
That defeats the whole point of a game.
Which ultimately means that it just might work differently in video games than it does in something like the lottery.
But there’s an argument against that too!
Powerball’s lowest jackpot is $40 million.
Now most of us would think to ourselves, “if I had $40 million, I could probably get through the rest of life okay.”
And yet, even though the lowest jackpot fits the criteria of the
‘if I win this, I’ll never have to worry about winning things again’,
it attracts far fewer players than the large jackpots do.
As I’ve said, as prizes increase, there’s an exponential growth in tickets sold.
So even though, materially, to most of us, there’s not an enormous difference between
being handed $100 million and $300 million, more people chase that increase anyway.
And the funny thing is, the jackpot gets split among however many players actually get the winning numbers.
So as the ticket purchase count climbs, and the probable number of winners increases,
often, in the big payout jackpot scenarios,
any single winning individual doesn’t actually see a significantly larger payout
than in some of the more standard jackpots.
Because of the odds change made in October, the first week of January –
the week that we’re writing this –
sees the largest Lotto jackpot in American history
at $800 million dollars.
If the player turnout and tickets purchased continue to follow the exponential curve
that the data up to this point shows,
we may have to sit back and reconsider how we build incentive systems in games, especially in MMOs.
Not that we’d like to!
As a designer, James far prefers to think of players as being rational actors.
At least as far as incentives are concerned.
But if people really are gonna turn out in record numbers to play Powerball this time,
even though they have substantially worse odds of winning than in the past,
then, well, maybe it’s worth at least experimenting with this concept in some future designs.
See you all next week!
[Outro music]

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