  We are often faced with the non-trivial task of designing incentive
mechanisms in the era of Web3. As history has shown, many Web3 services failed
mostly due to the lack of a rigorous incentive mechanism design based on token
economics. However, traditional mechanism design, where there is an assumption
that the users of services strategically make decisions so that their expected
profits are maximized, often does not capture their real behavior well as it
ignores humans' psychological bias in making decisions under uncertainty. In
this paper, we propose an incentive mechanism design for crypto-enabled
services using behavioral economics. Specifically, we take an example of a
crypto lottery game in this work and incorporate a seminal work of cumulative
prospect theory into its lottery game mechanism (or rule) design. We designed
four mechanisms and compared them in terms of utility, a metric of how
appealing a mechanism is to participants, and a game operator's expected
profit. Our approach is generic and will be applicable to a wide range of
crypto-based services where a decision has to be made under uncertainty.
