Measuring the Effects of Regulation Policy on Online Game: A Vector Autoregressive (VAR) approach

The purpose of this study is to study the effects of regulatory policy on online gambling, one of increasingly popular types in the online game industry. Previous information systems (IS) studies on online game primarily aim user behavior. Nowadays, instead of heuristic approaches on individual behavior, there is a growing need to examine the effects of regulatory policy on dynamic changes of games or game providers. Standing above the approaches of prior studies, we empirically test the regulatory policy effect with two theoretical viewpoints: social influence and previous experience. We use a vector autoregression (VAR) analysis to predict game usage and to model various forms of the co-movement of online games. We provide also evidence of strong Granger-causal interdependencies within games and game providers. This study offers one of the first empirical evidences studying the effects of regulatory policies on online game industry. In research methodology point, this study also introduces an explanation of VAR methodology in IS research. Thus, it delivers advanced knowledge on gaming behaviors as well as helps develop suitable regulatory policies to satisfy policymakers and to protect users of online game.