Friday, March 15, 2013

Gaming Self-Interests in Basic Economics

Alan Clift asks on Board Games Geek HERE 
If there are Games that “that teach Adam Smith's Invisible Hand”?
Lots of games are economics based, but do any teach Adam Smith's insight of '...earning money by his own labor benefits himself. Unknowingly, he also benefits society...'?
Maybe early in games, when players are more prone to co-operate, by trading freely. But usually the tactic is to minimize the need for trade, so you can't be hindered during the end game. And other tactic is to create a monopoly, which doesn't benefit the entire table.
Co-op games teach mutual benefit. But those are obviously team oriented, not the subtle side benefit of helping all while you help yourself. Maybe games can't unless goals are complex enough to have both individual rewards and team rewards. And the final winner adds the totals of both.
Are there games like this?
Matt Highfill replies:
“I think it depends on the game. You are correct that as a game progresses, players are increasingly less willing to cooperate. I think this is primarily a result of certainty, that is, they have become certain of the other players strategy and are now trying to thwart it. At the same time, there are many games, particularly drafting games or set collection games, where players are guided by an invisible hand. In Biblios for example, if a blue 4 and a brown 4 come out, and you have a better chance of acquiring the majority in brown rather than blue, then it would behoove you to take it. This could directly benefit another player who wants blue (whether you realized it or not). So for the most part, I agree with you, but I do feel there are a few salient exceptions.
The other replies are also unhelpful (follow the link).
I have discussed the Red-Blue game on Lost Legacy before.  This shows that over ten rounds or more the Tit-for-Tat strategy, if chosen from the start, as Play BLUE, and thereafter Play whatever colour the other player plays in the subsequent round, always scores higher positive or lower negative scores than any other strategy. For instance, playing RED from the Start and playing RED thereafter, whatever the other player plays always scores high negative scores for both parties.  The only exception is where the opening RED player switches to BLUE and the other player follows in subsequent rounds with BLUE too.
This does not teach the alleged, but invented, “Adam Smith's insight“ of “earning money by his own labor” which “benefits himself” while “unknowingly also benefits society”. 
Monopolists “earn money” from “narrowing the competition and raising prices”, as do those who campaign for tariffs and other protections (Smith).  Such RED strategies certainly “benefit“ those who “earn money from their lobbying “labour” in persuading gullible legislators of the supposed “dangers” of foreign imports, but neither strategy “benefits society” knowingly or “unknowingly”.
The RED-BLUE games make the point that co-operative actions (play BLUE- BLUE) benefit any two parties at a time more than selfish, shortsighted RED play actions do in all plays of the game.  By extention, playing Blue and then playing whatever the other player plays thereafter, when replicated as the general behaviour in market interactions does “benefit society” both knowingly and unknowingly conforming more closely to Smith.
Smith suggested that co-operation in the "butcher, brewer,  baker" example was best achieved by addressing the self-interests of the other party (WN I.ii) and not by only addressing one's  own self-interests.  This is almost the complete opposite conclusion than that derived by many modern economists commenting on Smith view on self-interest and his illusory "selfish" approach to exchange and bargaining.


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