Artificial scarcity design heuristics for digital collecting: Evidence from the non-fungible token market

Abstract

This study draws from the theory of collecting to explore how blockchain technologies facilitate virtual art trading and collecting, and then analyzes an NFT dataset to develop artificial scarcity design heuristics for royalty income maximization. The findings show a trade-off between scarcity's positive effect on the sale price and its inverted-U shape effect on trading frequency. Based on this trade-off, several royalty income maximization scarcity design heuristics are proposed and validated using computational studies. The implications of this paper extend beyond the NFT market to other virtual goods markets where scarcity is artificially designed to create value.