Optimism and Frequency Biases

Humans have a number of cognitive biases that can lead us to distort reality and make bad decisions. One of these is called the Optimism Bias. It is the mistaken belief that we are less likely to experience a negative event than someone else. Games can emphasize this bias by overegagerating other people's loses. Because we see other people losing when we aren't, we may get the mistaken impression that we are more skilled or lucky than other people. If we feel like we are exceptionally skilled at a game, we will keep playing.

Another cognitive bias is towards more recent or memorable information. This is the mistaken belief that events that happened in your recent memory are more likely to occur again in the near future. We overestimate the frequency of something happening because it is memorable to us. When a game shows that other players just got a rare item, it gives us the impression that this could happen to us soon, even though the odds haven't changed.

The Clustering Illusion is another tendency for people to erroneously overestimate the significance of short winning streaks and see phantom patterns in random data where there aren't any. A game that proclaims to give random rewards could in fact secretly have a tendency to give rewards in streaks to emphasize this cognitive bias.