Satisficing A Portmanteau

posted in: Commentary, Strategy | 0

If you’ve taken an economics 101 class you probably know the idea–the ‘homo economicus’ rational being that pursues their own self interest and makes economic models neat and tidy. It’s the frictionless flat surface of economics. It helps us understand very broad, general concepts of economic behavior, since people are generally self-interested and generally rational.

Early economic thinkers, like Adam Smith, wrote about the self-interested person as a general benefit to society through trade and the division of labor. He wrote, ““It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

However it’s very clear that this simplistic idea of human nature doesn’t actually model real-life behavior. People are not always self-interested in a non-truistic* way, and more importantly, they often don’t have the knowledge necessary to make great decisions.

A lot of very interesting research has been done in the field of behavioral economics, which sort of combines psychology with economics. As readers of this site will know, I love learning about cognitive biases and understanding my own psychology better. Behavioral economics uses that knowledge to get a deeper understanding of human behavior, and it’s utterly fascinating.

Bounded Rationality

But what we’re going to be talking about today is the concept of satisficing, or bounded rationality. This idea came from Herbert Simon, who argued that the idea of the ‘rational man’ was too optimistic regarding the knowledge gathering powers of people. Instead, people satisfice (a combination of satisfy and suffice). They gather a limited amount of information and make decisions based on a satisfaction threshold.

Think, as an example, of trying to choose a restaurant for dinner. You could go online, gather data about driving distances, Yelp reviews, price, and menus, and formulate some kind of quantitative valuation algorithm. Or you could find one that has the type of food you’re craving, at a decent price, with good reviews, and just go with that. In that situation you’ve satisficed. You’ve created a reasonable satisfaction threshold (decent price, good reviews), and decided once you found a restaurant that met that threshold.

I think this is a fantastic concept to understand when it comes to board gaming. Nearly every single decision you make in a board game is a satisficing decision, and understanding this can help you become a better and faster game player.

AP

I’ve talked about this a bit on the podcast before, but thinking in terms of satisficing can help those who struggle with analysis paralysis (AP) to make quicker decisions. The AP person is attempting to make a fully informed decision when that may be impossible or may require an extreme amount of calculation and information gathering. Or perhaps their decision making threshold is far higher relative to their opponents.

No one likes to be stuck at a table with someone who is unable to make a decision in a socially appropriate amount of time. If you have trouble with AP, think in terms of satisficing. You will not be able to get all of the information, so try to prioritize the most important information and calculations for this particular game, and resolve to make a decision once you’ve looked at those. Or, especially if you are pretty familiar with the game, evaluate only your first gut instinct decision. If it seems like a good decision, go with that. I frequently do this and find that it works out fine to keep me relatively competitive.

Strategy

Understanding satisficing can also help you strategically, as you can use the idea to help predict your opponent’s play. Think about this: everyone in the game is going to be satisficing to some degree, so you can try to predict their play based on how long they took to make a decision (relative to their normal).

Games usually have main strategies that are fairly obvious, to help bring people into the game easily. If someone has started pursuing one of those strategies, that will be their new threshold for decision making. They’re going to be weighing other decisions against the general path they’ve already started down. Combine that with the human tendency to make the sunk cost fallacy, and you can make reasonable assumptions that opponents will probably continue along the same strategic paths.

If you know your opponents well, you can also use that knowledge to try to predict their actions. People tend to have a bias towards solutions that are familiar to them, so you can assume that their satisficing thresholds will lean towards familiar strategies or attitudes.

Unless you have particularly bright opponents, you can make these kinds of assumptions and be sure that just as you are satisficing with your decisions, they will be as well.

*People are self-interested in the sense that they do what is highest on their preference scales–that is, they do what they want to do most, and what they want to do the most is, by definition, what they do. This may seem like a useless point to make, but it forms the basis for marginalist thinking, which has been very valuable in economics.

 

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