Seung Yoon Lee

Job Market Paper

Time–Money Choices in Virtual Environments: A Structural Approach to Player Monetization

(with K. Sudhir and Kosuke Uetake) 

Abstract

Monetizing virtual environments (e.g., games,  metaverse platforms) requires understanding how players make interlinked decisions about spending time and money. We develop a dynamic structural model of player behavior that captures these time–money interactions: players choose when and whether to play and/or purchase in-game tools, with purchases dynamically altering the utility of gameplay in the present and future. Our framework generalizes durable goods purchase models (focused on purchases) and incentive compensation models (focused on effort/time), and is applicable to gamified virtual contexts such as online learning, health, and loyalty programs. The model clarifies how purchases interact with the environment and produce dynamic complementarities or substitutions in future play and purchase decisions. Using data from a single-player golf game, we uncover three latent segments: premium enthusiasts, who enjoy gameplay and are most willing to purchase tools; win-seekers and progress-seekers who both find gameplay costly and are more price sensitive—the former primarily values immediate rewards, while the latter values level-up rewards. Counterfactual simulations of monetization strategies---such as whom to give free tools and when, or dynamic difficulty adjustments---reveal opposing effects across segments and game states. Our findings offer actionable guidance on designing personalized in-game environments that align player incentives and maximize monetization.