Cracking Open the Economics of Blind Boxes: What's Inside Counts!

Humans love to explore the unknown. This is why we go on adventures to the corners of the earth (even outside of earth sometimes), the allure of mystery has always captivated our imagination. But it seems that this fascination with the unknown extends even to our economic choices. Enter the curious world of mystery boxes. 

We have all probably seen those videos on our social media feed – an influencer, celebrity, or even an average Joe unveiling a "mystery box" and being showered with extravagant, unimaginable gifts from a seemingly ordinary package.  

But what mechanism lies behind everyone’s decisions to potentially lose their hard-earned savings on a little black box? A lot, actually. It turns out that mystery box makers utilize a mixture of psychological and economic “nudges” to make buyers click the “add to cart” button.  

The most common definition of the blind box is a general term for the “uncertain goods” sold on the market. When one is lucky, one may obtain the “special prize” or “hidden version” with a 1/100 probability. In recent years, collecting, opening, and chasing these special prizes have become a new leisure for young people.  

For many Gen X/Y individuals, the concept of blind boxes envisaged itself in snacks. In a “Charlie and the Chocolate Factory”- esque fashion, many children tended to buy snacks just for a card or a toy, hoping to collect a “full set” of them. Following this trend, the first modern iteration of the blind box appeared in Japan in the 1980s when Dreams released the first-generation mini-doll figure “Sony Angel” and sold it in a blind box. Ever since then, the popularity of blind boxes has skyrocketed globally.  

But why? If 90%+ of blind boxes result in losses, why are they still so popular? 

Gamblers Fallacy

Gambler’s Fallacy, a niche and deadly psychological effect, has plagued gamblers and chance enthusiasts since the dawn of time. The trappings are quite simple and analogous to a gambler who has lost one too many games a night, hence leading them to think that they may win at least a game if they keep playing, as “luck is surely bound to come back to them.” In actuality, this is false.  

Assume this. If a coin was tossed 9 times and all 9 of those tosses were heads, one succumbing to the Gambler’s fallacy may assume the probability of the 10th toss being a head would be (½)^10, but pointedly, the probability would still be ½. No matter how many turns the coin was tossed, the nth time and the 1st time both would have an unequivocal probability of 50% to get a “head” or “tail.” Gambler’s fallacy plays into the blind box effect as if someone were to buy a lower quality blind box, they would be tempted to believe the next blind box they buy, or one they buy soon would be of high quality when in fact it is untrue.  

The Endowment Effect 

The Endowment Effect states that one would value their belongings more than something one doesn’t possess. In other words, this theory states when people own a thing, people’s evaluation of it will be much higher than before owning it. The endowment effect is partially based on the theory of loss aversion, where the pain of losing is psychologically twice as strong as the pleasure gained from winning. People tend to put a premium on selling what they own – or they will “cope” with what they own by overvaluing it - because they worry about bearing the loss. 

This theory relates to the specific concept of blind boxes as it is a primary reason for blind box merchants’ profits. One most likely has a higher chance of getting an object with a lower financial value than the price of the mystery box but is likely to assign it a relatively high “moral value,” thus ignoring the losses they suffered. After purchasing a blind box, consumers are less likely to be dissatisfied with the contents of the box, hence causing a higher likelihood for consumers to buy a blind box again. Consumers are also more likely to assign a higher financial and/or sentimental value to the boxes, mentally justifying their decision to purchase a box. 

Availability Heuristic 

The availability heuristic works like this: the more information that is presented to someone about something, the more inclined they are to “lean” to that thing when concluding. Take this example: if I were to ask you whether firearms were the cause of more homicides or suicides in the United States, most people would claim that firearms were the cause of more murders. However, it turns out firearms were the cause of twice the number of suicides compared to homicides.  

People are also often influenced by availability heuristics when making decisions about blind box consumption. Trends on social media posted by influencers can assuredly affect the consumption patterns of consumers in the blind box industry. This concept of “survivorship bias,” where only either the rarest mystery boxes or top-tier rewards are shown on social media, makes human heuristics believe that these top-tier rewards are omnipotent to receive, hence instilling a false sense of optimism, creating more demand for mystery boxes.  

Prospect Theory and Reflecting Effect 

Prospect theory is a theory that applies psychology to economics to predict the judgments and decisions people are more likely to make under different risks. Or, simply put, people tend to choose a gamble rather than a certain loss when the expected losses are equal. This means that most people will choose the latter when faced with the choice of “Lose $900 for sure OR 90% chance to lose $1,000” because people will hope to have this luck to avoid bad fortune.   

This can be surely exemplified by the economics of the blind box and how it is marketed to consumers. A blind box is marketed to consumers as having a marginal percentage of the consumer win a certain prize compared to having a substantial percentage of the consumer lose a certain amount of money – the far more likely outcome. Loss aversion also comes into play here in how the blind box in marketing. When faced with the dyadic choice of losing money or winning a large prize, consumers will oftentimes choose the latter, resulting in an overconsumption of blind boxes. 

So next time, before you buy that tantalizing little box from the vending machine, shop aisle, or pinball slot, think about it - is it for the prize or for the thrills?