Hedonic Valuation of Online Game Participation

• Main Authors: KAUFFMAN, Robert J., KIM, Kwansoo, YOO, Byungjoon
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2012
• Subjects: Economic analysis; hedonic pricing model; hedonic value; mechanism design; online games; utilitarian value; valuation.; Computer Sciences; Management Information Systems
• Online Access: https://ink.library.smu.edu.sg/sis_research/1747; https://ink.library.smu.edu.sg/context/sis_research/article/2746/viewcontent/p290_kauffman.pdf
• Institution: Singapore Management University

We use hedonic valuation to establish a basis for valuing the time a user participates in an online gaming community. We distinguish between utilitarian and hedonic value. Our application involves elements of both utilitarian and hedonic value, however, the latter is much more important. We use an extensive data set involving a massive multi-player online role-playing game (MMORPG) from Korea. We specify and test econometric models that reflect the appropriate empirical structure for the setting, based on information about the players and the activities they engage in. The results permit us to estimate the hedonic value in monetary terms for the use of this mechanism per minute of participant use. We explore how such information can be used to create the appropriate incentives via optimal participation fees and subsidies to maximize consumer value.