When Virtual Meets Real: The Effect of Pokémon Go on Local Restaurants

Upon release, Pokémon Go, an augmented reality technology based game garnered tremendous interest in the public, with an average of 20 million daily active users. The game combines geo-spatial elements along with gamification practices to incentivize it's users movement in the physical world. Such incentives can have potential externalities to businesses associated with them. Using online reviews of restaurants as a proxy for sales and quality, we study the impact of Pokémon Go on local restaurants. We treat the release of Pokémon Go as a natural experiment and study the post-release impact for the associated restaurants. Being the first research to study economic implications of augmented reality applications, the research has will potentially lay theoretical foundations of how the augmented-reality games affect the consumer economics behavior. It also helps to build insights into potential value of such associations for business owners as well as policy makers.