Perceived Fairness and User Engagement: A Quasi-Natural Experiment on Impacts of Rule Breach and Recovery Measures in Online Gaming

Online gaming platforms are inevitably subject to system vulnerabilities such as bugs and loopholes. Some players may take advantages of these bugs to gain illegitimate benefits, being viewed as rule breakers to platforms. Online platforms face a dilemma between disciplining rule breakers with the risk of being perceived unfair to the rule breakers, because rule breaches are after all caused by the game software's technical glitches and belong to a “gray area,” and not disciplining rule breakers with the risk of being perceived unfair to the observers. Different countermeasures may result in significantly different economic impacts. In this study, we use the unique field data of an online gaming platform to examine the effects of players’ rule-breach behavior due to system bug incidents and the platform's different punishment decisions on players' subsequent participation. By employing various empirical models, we find that the occurrence of bugs has negative impacts on the observing players' in-game online duration and consumption. Surprisingly, although the platform is responsible for the bugs, not punishing rule breakers leads to even larger reductions in observing players' platform participation than punishing. We thus highlight that the primary driver of the participation reduction is the platform's inappropriate countermeasure, rather than the bugs, and call for online platforms' attention to designing effective rules and recovery measures under the situation of a rule breach. Our findings enrich the literature and theories concerning the relationships between the online platform system's loophole exploitation, its associated recovery measures, and sustained user participation.