The Allure of Mystery: The Behavioural Economics behind the Blind Box Economy
Author: Tan Helena Xin Yi (Research Executive)
Editors: Singaravelan Divyashree (Research Director), Goh Jing En (Vice President (Research & Publicity))
Certainty in consumption is overrated. Or, at least, that is what the endless lines of people queuing up for the latest blind boxes seem to be suggesting. Blind boxes have evolved from a niche trend to a full blown cultural phenomenon. However, what is driving this obsession? Behavioural economics offers insights into this allure of mystery, exposing how uncertainty affects our views on risk, reward and relative gains in consumption which all play into a psychological cocktail that keeps us hooked. Welcome to the blind box economy, where shopping is a game of chance and uncertainty is the new currency.
The genius of blind boxes is that they exploit our love for suspense and surprise. You may end up with something valuable (just what you wanted!), but you could also end up with something worthless to you (just what you definitely did not want…). The truth is, we are not great at assessing blind box item’s absolute value. Instead, we fixate on what we might get, our potential wins and loses.
This ties into the reflecting effect in prospect theory whereby when faced with uncertain losses people tend to be more risk taking in an attempt to recover losses. (Mi, 2023) If the blind box item is not valuable, the loss is greater which motivates consumers to take more risks – like buying more blind boxes – hoping to get something valuable and reduce the loss, making up for their initial investment. This is also further linked to the idea of sunk cost fallacy.
Once you have bought a few blind boxes, you are invested. You have already spent money on a few boxes, so you feel the compulsion to keep buying because — what if the next one has the item you are after? Wouldn’t all the previous buys be for nothing! (Ah, the good old gambler’s mindset) Unfortunately, if you listen to this little voice you may often end up spending more than the actual value of the item you desperately vied for, such is the case of many sunk cost fallacy blind box victims.
Seems less worth all the trouble now, doesn’t it? Or is it worth it? According to the endowment effect, you most likely will feel it always will be. This refers to ‘the emotional bias that causes individuals to value an owned object higher, often irrationally, than its market value’. (Ganti, 2023) Although the blind box item may not have been worth the lengths to get it, consumers value it higher just because it is theirs. This means valuing even the items you may have originally deemed worthless. The book ‘Thinking, Fast and Slow’ explains this in relation to loss aversion. (Kahneman, 2011) Loss aversion refers to how most customers find the psychological pain of loss is greater than the joy in gain. Because consumers wish not to feel as though they have incurred losses, they value their newly owned items more. This bias works perfectly for sellers, profiting from the hidden losses that consumers overlook.
So, are blind boxes the future of shopping? This consumption is spreading like wildfire, with some companies in China even adopting the blind box approach to offload surplus food inventory. (Yang, 2024) Blind boxes are cleverly designed to keep reeling consumers back in , as long as uncertainty, anticipation, and risk continue to drive human behaviour, the blind box economy is here to stay.
References
Ganti, A. (no date) Endowment effect: Definition, what causes it, and example, Investopedia. Available at: https://www.investopedia.com/terms/e/endowment-effect.asp (Accessed: 1 November 2024).
Kahneman, D. (2024) Thinking, fast and slow Daniel Kahneman. London: Penguin Books.
Mi, L. (2023) ‘Theoretical Perspective of Behavioral Economics: The Research on the Internal Mechanism and Consumer Behavior of Blind-Box Economy’, in Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022). Atlantis Press (Zeger Karssen), pp. 1548–1555.
What is the ‘blind box’ economy and why is phenomenon sweeping China? (2024) South China Morning Post. Available at: https://www.scmp.com/news/people-culture/trending-china/article/3254906/what-blind-box-economy-and-why-retail-phenomenon-sweeping-china-consumption-craze-markets-mystery?module=perpetual_scroll_0&pgtype=article (Accessed: 28 October 2024).