"To Play or Not to Play?": A Review of the Sunk Cost Fallacy in Online Gaming Based on Game Theory and Decision Trees

• Yunjin Wang

  Author

To explore the pervasive "sunk cost fallacy" within online gaming, focusing on the Chinese gaming market. Methods: This review integrates behavioral economics with applied mathematics tools (game theory and decision trees) to systematically synthesize existing literature on the psychology of sunk costs, prospect theory, and mental accounting. It models irrational behaviors using decision trees with modified utility functions. The application of these theories to real-world incidents in China, such as the proliferation of "gacha" mechanics and the 2021 regulatory restrictions on minors, illustrates how bounded rationality leads to suboptimal equilibria and escalating commitment. Understanding the mathematical thresholds of irrationality is crucial for mitigating digital addiction. The findings provide profound implications for policymakers to design holistic interventions and for developers to foster healthier gaming ecosystems.

• JAESD000014.pdf