Why buy stuff? Consumption and rationality. Intro part 5

This post aims to provide a basic understanding of consumption. As a first step in the vast landscape that is economics, I go through the details for a common definition for economics as a subject. The most established definition of economics is some variant of “the study of production, consumption, and distribution of goods and services”. This post is the fifth part in a series called “introduction to economics”. I recommend that you go back and read the previous posts in the series if you’re unfamiliar with economics as a subject.

Consumption is the use of goods and services by individuals. Through using goods and services individuals derive utility – i.e. value or worth – which raises their life quality. The prospect of improved quality of life generates a demand for goods and services. To attain goods and services individuals spend income. In classical economics the consumption of goods and services is regarded as the final purpose of economic activity as the only way to attain more utility through economic means is to spend it on goods and services. 

In this classical school of thought the consumption level of individuals, or more often the consumption level for all individuals in a country, is regarded as an important measure for an economy’s relative success. I.e. if we consume more than our peers then our population also derives more utility. It should however be pointed out that the consumption level is not, and should not be, the only measure for the success of an economy. For instance, plenty of goods and services create negative values for others when they are consumed – like your neighbor listening to really loud music in the middle of the night or someone blowing cigarette smoke in your face. Unless you’re into it then all the more power to you.

To study the consumption of individuals, economists make some necessary assumptions about the behavior of individuals. Making these kinds of assumptions are controversial as they do away with nuances in human behavior that might influence outcomes. It is the curse of social sciences that human behavior does not really lend itself to being modeled and described in general terms. I would however argue that some assumptions are needed in order to study economics at all – without them we would have to be satisfied with the simple answer that some consumers buy things for different reasons at different times. In other words, these assumptions are a sort of necessary evil. 

In essence the assumptions about human behavior revolve around that consumers make rational and informed decisions about their current and future spending. Rational basically means that individuals make logical decisions. In terms of consumption they are assumed to pursue as high a level of utility as possible and then consume the goods and services that achieve that goal. This assumption captures one aspect of human consumption behavior in that it mimics our general strive to improve our quality of life. In reality, people only make rational decisions about their consumption to a certain extent. For example, there is often a conflict between short-term and long-term utility. Consumption today comes at the cost of future consumption and even though future consumption might be more beneficial in the long-run many individuals have a preference for the here and now. But hey, that new game that just came out might be worth having to work until you’re 70 – I’m certainly not on the hunt for more storage shelves. No, sir. 

Moving on, the assumption that consumers make informed decisions says that individuals have access to perfect information. I.e. consumers have perfect and instantaneous knowledge of all prices, their own potential utility, and own costs. This assumption more so than the other is one of convenience. Having knowledge of all prices in a market can be somewhat plausible in today’s economy where there are services to check for the lowest price of a given good. The other conditions are a bit more unrealistic. Unless you have consumed a given good or service before it is impossible for you to have a perfect understanding of its actual utility. And even though you might know the cost of a good or service in terms of money you likely only have a vague understanding of its real cost in terms of foregone income and lost opportunities. 

If you feel like going on a crusade after having read about these assumptions don’t worry: the feeling is mutual. All economists are perfectly aware that these assumptions are overly simplistic. However, without them, all models would be complex messes of trying to fit a model to every individual. There have been plenty of research and models where these assumptions have been modified or let go altogether – if you’re interested you can hop onto the wikipedia article for bounded rationality. You can also read up on prospect theory which netted its originators the nobel prize in economics in 2002. That’s enough economics for now, but there is plenty more to be said about the extensions of these assumptions and their effects on the assumed behavior of consumers. I will leave that for another (rainy) day and move on to how we can think about consumption in terms of game design and board games.

Having a mechanism that allows players to consume goods and services can be an effective way to introduce interesting choices. There are plenty of setups which let an avatar in a game consume different items (goods). This is very common in games with RPG-elements where your avatar or character might acquire items either through skill or purchase. Letting players acquire items of value (utility) through skill can provide incentive for players to pursue different activities in a game. A skilled designer might even use it to indirectly guide players towards certain desired locations or set up interesting choices for the players. One example of a game where this is used is in Gloomhaven where the allure of potential loot chests in rooms off to the side provide players with risk vs reward scenarios. Do I go into the other room even though it might contain a shitload of monsters and exploring it is not really required to complete the current scenario? The answer is almost always yes. 

Setting up some sort of currency and a market for trading goods in a game can provide another interesting consumption opportunity for players. Players must evaluate each good in the market and determine which combination of goods that provides the highest utility. What’s interesting about this, particularly for an economist, is that players often strive to behave rationally within the context of a game. Perhaps even more so than in the real world due to the general constraints of board games: the game only lasts for a limited amount of time; most games strive to determine a winner; any income gained is only usable within the confines of the game; the amount of available goods and services are, relative to the real world, fewer; information is plentiful or even perfect and accessible. The combination of these factors provide for a scenario where players have little else to do other than maximize their utility and become the dreaded Homo economicus

Even if almost all games are goal oriented, and incentivize players to behave rationally to achieve said goal, many games provide enjoyment for participants even if they do not try to actively win the game. I have experienced many game nights with party games where the context and experiences within the game ultimately made me not care so much about the actual outcome of the game. I also have friends and family who don’t really care for the outcome regardless of game and are more interested in the group as a whole having a good time – often taking pity on the players who are doing worse and helping them. I.e. not behaving rationally, despicable. There are also others who are just playing to explore a theme or ruin it for one or more of the other players: we have a running joke in my gaming group that I don’t play to win – I play to make sure that my friend Alex doesn’t win. But this begs the question: what makes a game enjoyable even when you’re not actively trying to win? Are there any tricks to making sure that different player types enjoy your game? Hence, this is my challenge for this week: 

Challenge: design a game where the goal is to make everyone else achieve some win condition. It could be an economic game where you’re trying to go out of business, or maybe a tournament in an ancient civilization where the winner gets the honor of being sacrificed to the gods. What happens to the player experience? Are we behaving rationally even when we’re doing our best to play poorly? Do you know of any games where this is already the case? Feel free to leave your thoughts below.

2 Comments on “Why buy stuff? Consumption and rationality. Intro part 5

  1. Good read! I like when you bring in a bit more of the economics stuff, and even more when you connect it to board games.

    When I was a kid we sometimes played a version of chess where you attempted to lose. The opponent was forced to capture a piece whenever possible. It was a fun experience, but I can’t say it was a great game.

    There is also an old Swedish board game ”Sätt sprätt på en milj000.000n” (“Spend a milli000,000n”) where the goal is to lose all your money. (The story, though, is that by doing so you inherit 99 millions, so the ultimate goal is still to gain money.) The second place in that game goes to the player with most money, which is an interesting twist, but other than that the game is pretty crappy. 🙂

    1. @Johan Falk, Thank you! I am your humble servant: I’ll try to intertwine the two more often.

      Making game be not about winning probably leaves a sour taste in every player because we’re used to having to excel at something in order to win. Taking away the opportunity to play skillfully likely makes us feel like we didn’t accomplish anything while playing. I think that you have to find some elements that can compensate for this loss in player experience. Someone on another forum suggested that a game like that would have incorporate some kind of roleplaying – an interesting suggestion as it would allow for players to set up their own goals within the context of the game and have them not necessarily be rational.

Leave a Reply

Your email address will not be published.

Please reload

Please Wait