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The incentive is there's over a decade of watching Steam user behavior. And if you want to make money, having your game on sale during a major event can move a lot of copies and generate a fair amount of revenue.
IE If twenty people won't buy a game at full price. But they will buy a game at 50% off. Sure the publisher is making less money per user. But selling the equivalent of ten full priced copies that you weren't going to sell before adds up when you add a couple of more zeros to the number of buyers.
And lots of people wait for major events to buy games, so there's a lot of competition between publishers to have attractive discounts to attract buyers. Should I buy Red Dead Redemption 2 or Jedi Fallen Order if I can only get one...
The average price I've paid per game that I've paid for (i.e. not including free games) is less than US$5.
I think it might still be less than $5 even if you excluded bundled games, since I do buy a lot of pretty cheap games.
And such deals are available on Steam and elsewhere; this sort of pricing is pretty common. For example, an older game or an indie game might easily be $19.99 base price, and then on -75% for a sales event, at $4.99.
You can see sales raising like 10-fold during sales, and while sales became less extreme due to additions like refunds - they're still a good way to move products that you otherwise wouldn't be selling.
Because of that, and because of the nature of video games (they make their money within the first two weeks of sale), then it's part and parcel of how it all works.
And remember, when you're dealing with non-physical goods, things like warehousing, transport, and manufacture aren't a thing, so there's no additional costs. You can afford to cut huge discounts when you're essentially selling ONE filename to millions.
Sure, never said otherwise. The point is they can.