Murphy turning into the Bogeyman at the end is symbolic.This is because the Bogeyman represents the dehumanizing of people as revenge. When Murphy faces the Bogeyman and wins midway through, his unmasked face switches between Murphy's and Napier's face. This shows the revenge Murphy wanted, and on who. Later though, when Anne confronts him however, he turns into the Bogeyman in her eyes (but he stays the same). After that, the Bogeyman takes over, chasing after Anne. Afterward, the player's choice represents what really happens. If the player spares her, Murphy doesn't give into revenge against Anne for her chasing him throughout the game, and forgives her, hence the Bogeyman placing down his hammer. If the player kills her, Murphy gives into revenge, and Bogeyman does his job.