I take issue with the idea of considering consider this a "sad" event or assume that people are "falling" for emotional tactics and that they're later "convincing themselves" that the money was well spent. I think if you break down the vast majority of expenditures, you could say this.
* Bought a $500K house over a $400K house, or over a $25K house that was completely livable? Seems like the buyer fell for emotional tactics and peer and/or realtor pressure. Later they convinced themselves the money was well spent.
* Upsold on a new phone? Apple used emotional tactics to compel you to spend that money when you weren't really interested.
In games:
* Spent $200 during the Steam Sale on games you never actually played? How manipulative of Valve.
* Spent $1,000 buying Magic Cards after-market so you could win at a local tournament? It's a psychological sickness that you'll later convince yourself was just you "having fun".
There's a serious problem when people analyze any customer's behavior as being different from their own, and therefore irrational. I do think that there are many companies that trying to take advantage of consumers, but to another commenter's point, there are also many companies doing this responsibly. You could argue that many industries or businesses work on irrational behavior of consumers, but I think it's a slippery slope to categorize it as irrational - it's just behavior. People spend their income on all forms of entertainment good and bad, and frankly I was unhappy a lot of the time buying console games for $60 that never lived up to expectations. At least with free-to-play games I can choose what I'm paying for.
Economics says people will pay what they think something is worth, and it's up to the consumer to balance the cost vs. the utility they get from it. In your examples the key is if the buyer was fully informed, or surprised and learned something new after buying that changed their mind. It only works as well as the consumer is informed about the product, the market, and the alternatives.
Paying $200 for a bunch of Steam games might be fine, as long as you know what you're getting... Or, you might feel scammed if you thought you were getting a complete game and later discovered you had to pay more via IAP to get what you thought you paid for in the first place.
This change (not calling IAP apps "free") is part of trying to inform the consumer. I'm not sure if it's the best solution as IAP seems like its own category, but that's the goal.
I think the vast majority of customers know what they're getting when they start playing a free game with incredibly high production values. Additionally, to the economics point, consumers are making choices about whether they think a purchase is worth it every single time they are faced with an IAP.
There are also varying degrees of IAP:
- Should a "free" game that offers ads be considered free? You're paying for it by being forced to watch interstitial ads. (ex: Flappy Bird)
- Should a "free" game that has IAPs for purely cosmetic items that have no impact on the game be considered free (ex: TF2 model)?
- Should a "free" game that has IAPs that are optional that help you win be considered free (ex: Candy Crush)?
- Should a "free" game that has IAPs that have a pure pay gate 20 minutes into the game be considered free?
Personally I think there are a ton of varying degrees here, and putting a "if you have IAP in the game, PERIOD" it's not considered free, makes a black-and-white statement about something that has many shades of gray.
Your assumption is wrong- games companies (clarifying- the exploitative ones) will generally take advantage of the fact that the majority of customers actually DONT know what they're getting. A free game is expected to be free. Ridiculous concept, I know.
A free game with ads should be considered free. That's simply how free services are categorized on the internet (facebook, twitter, reddit, etc).
Purely cosmetic items not affecting a game is a hard one to classify. Could go either way. A free game with optional IAP's is also hard to classify.
A game with a pay GATE is definitely not free.
So the hard to classify cases, if they are more pronounced to show that they are in fact, not completely free games, but free game with in app purchases available, the description or reviews can then go on to describe how that works. At the moment, the "offers in app purchases" in small subtext and a huge FREE DOWNLOAD button is insufficient and cause for much of the (I would argue, intentionally designed) confusion.
IAP created a breed of game developers that preys on spur of moment purchases on the part of the consumer. Yes, this exists in other businesses, but that doesn't make it acceptable or non-manipulative of consumers. A Lite version of a game, clearly specified, followed with a Full version paid version, is currently my preferred method of selling a game. No confusion is created on the part of the consumer, and they know what they're getting in either case.
First of all, "just behavior" doesn't really mean anything. You're arguing that people should stop trying to describe other people's behavior in certain terms, but I don't see any compelling argument. "I don't like it" isn't compelling.
Second, there's nothing wrong with "irrational". If I describe someone's behavior as irrational and I happen to be right, it doesn't automatically mean that I'm criticizing them. I might be, but just the use of that word doesn't automatically imply criticism. Humans don't make completely rational decision all of the time and that's okay.
Third, your examples are pretty much a mixed bag. At least three out of those four examples are about irrational decisions -- the first one might be completely rational, because we don't know all the details -- but that's the only characteristic they share. Dealing with an aggressive salesman who manages to convince you to get that new phone is very different from buying a bunch of Steam games because you thought you would like them and there was a bargain on them. That, in turn, is radically different from pouring $1,000 into Magic Cards alongside the time and dedication that go hand in hand with that level of enthusiasm for a hobby.
Fourth, spending $60 on a game you ended up not liking is a pretty good motivation for wanting to improve the process in order to avoid repeating the same mistake. Not all process improvements are legislative, of course. The sixty-dollar console game scenario, for example, doesn't deserve a law that decrees that all reviewers should be as critical as Yahtzee ;)
It all comes down to whether IAPs are a problem and, if they are, how much of a problem they are and how it can be solved. Personally, I find that the level of manipulation involved in mobile games with IAPs can sometimes be unacceptable [1] and that something should be done about it.
It appears that you're making a value judgement about behavior being rational or irrational, when it's just how human beings make decisions. If we all operated as purely rational individuals, unswayed by emotions, the vast majority of consumerism that exists in society would be gone. Singling out IAPs and free-to-play titles specifically while not going after basically every single consumer-based industry in the world is inconsistent and unfair to one specific sector.
We all make decisions based on our emotional responses to the information we're given - some people value certain things more heavily than others, and I don't think any individual or set of individuals can be the arbiter of whether a decision is rational or not. That's entirely up to the person making the decision.
The whole problem started with people who paid/downloaded and felt lied to afterwords. Better analogy would be an advertisement for renovated house with fixed ceiling and you find the ceiling was just colored and is leaking water during rain.
In most free-to-play games I have seen, player does not really know the real value he is paying for. At least when you do first buys, you usually do not know how far you can get with that item and when you will have to buy another one.
* Bought a $500K house over a $400K house, or over a $25K house that was completely livable? Seems like the buyer fell for emotional tactics and peer and/or realtor pressure. Later they convinced themselves the money was well spent.
* Upsold on a new phone? Apple used emotional tactics to compel you to spend that money when you weren't really interested.
In games:
* Spent $200 during the Steam Sale on games you never actually played? How manipulative of Valve.
* Spent $1,000 buying Magic Cards after-market so you could win at a local tournament? It's a psychological sickness that you'll later convince yourself was just you "having fun".
There's a serious problem when people analyze any customer's behavior as being different from their own, and therefore irrational. I do think that there are many companies that trying to take advantage of consumers, but to another commenter's point, there are also many companies doing this responsibly. You could argue that many industries or businesses work on irrational behavior of consumers, but I think it's a slippery slope to categorize it as irrational - it's just behavior. People spend their income on all forms of entertainment good and bad, and frankly I was unhappy a lot of the time buying console games for $60 that never lived up to expectations. At least with free-to-play games I can choose what I'm paying for.