Deceptively Framed Lotteries in Consumer Markets

TL;DR

This paper examines how deceptive framing of lotteries in consumer markets, such as loot boxes, influences consumer beliefs and willingness to pay, revealing widespread manipulation and its implications for marketing and policy.

Contribution

It demonstrates that common framing manipulations significantly inflate consumer beliefs and willingness to pay, highlighting the strategic use of framing in probabilistic selling.

Findings

Over 80% of sellers used deceptive framing techniques.

Deceptive framing increased willingness to pay up to six times the expected value.

Sellers anticipated and capitalized on belief shifts caused by framing.

Abstract

Consumers often face products sold as lotteries rather than fixed outcomes. A prominent case is the loot box in video games, where players pay for randomized rewards. We investigate how presentation formats shape consumer beliefs and willingness to pay. In an online experiment with 802 participants, sellers could frame lotteries using two common manipulations: censoring outcome probabilities and selectively highlighting rare successes. More than 80\% of sellers adopted such deceptive frames, particularly when both manipulations were available. These choices substantially inflated buyer beliefs and increased willingness to pay of up to six times the expected value. Sellers anticipated this effect and raised prices accordingly. Our results show how deceptive framing systematically shifts consumer beliefs and enables firms to extract additional surplus. For marketing practice, this highlights the strategic value of framing tools in probabilistic selling models; for policy, it underscores the importance of transparency requirements in protecting consumers.