Board game nights on Sundays when I was younger were some of the most memorable moments of my childhood. They were filled with lots of fun and yelling between my parents and three younger brothers; more importantly, they taught me how to think about strategy and competition. I always sought to win no matter how and learned how to scheme against my brothers into giving myself a more advantageous position over them -- it was a lot harder to trick my parents into my tactics unfortunately. With this being said, there were many valuable lessons and values I learned from these games that have helped me understand competition more deeply. Through the board games I used to play during my childhood, I want to explain what can be learned about competition in the business world.
The Dichotomy between Monopoly and Catan
As the name suggests, the game Monopoly is a zero-sum game. I assume that you know how to play Monopoly, so there really is no need for me to explain how the game works. The finite amount of properties means that it is important to buy as many as you can in the beginning to then hopefully build hotels on them to exploit those who land on your properties. It does not require much creative thinking to understand this and to play the game; interestingly, the game also illustrates how many Americans feel about the world today in terms of business competition. Researcher Shai Davidai states in one of his papers that because of the growing state of economic inequality, there are now stronger beliefs amongst people that the economy is a zero-sum game. The studies show how people have become more cynical in the way they view competing against one another and that there is a greater divide between the “have” vs. “have-not” of the world. Basically, there are only winners and losers in the world and the actions we decide to partake to our advantage will leave others with less. Quite a simple concept to understand yet one that is extremely fallacious to think of. As humans, we compete with each other in all facets of life, whether it be in sports or in the classroom or playing board games as I did when I was younger. It is easy to perceive the amount of money or the final score of a sports game as the only gain or win against others during competition. However, this type of thinking is toxic and outcomes should not be binary, with the results only being success or failure. Should being a winner only hinge on the fact that you succeeded at the expense of others failure?
For Catan, while another game of competition, it showcases a contrast to Monopoly in the way you play it and better mimics how the world truly works. For those who are unaware of the gameplay, I suggest watching the quick 4-minute video by The Rules Girl on YouTube that explains everything. After watching the video, you most likely understand where the contrast is with Monopoly. It is evidently clear that there is only one winner in the game as the board game must end. But I want to make a strong emphasis on the aspects of trade and collaboration to explain my point about why thinking about competition as zero-sum is dangerous. In Catan, your success benefits other people. In order to build the roads and settlements, you need 4 different types of material. While there is a possibility you are able to obtain all 4 resources without trade due to early luck factors, the probability of not trading at all is unlikely; even if it were possible, it still may be advantageous for you to do so given a certain material comparative advantage. It is similar to the Ricardian model in that sense and showcases a much better way of thinking about competition: success does not depend on the failure of others. Of course, that is not always the case as you can use the robber to continuously harass the same player for resources or blocking houses from being developed. But this tactic can backfire as creating strong trade relationships with other players is a hallmark of how to succeed in the game; ignoring the needs of others is the same as ignoring your own and collaboration is almost necessary to win, just like the real world.
The Zero-Sum Problem
In an ideal world of competition, everybody's actions will objectively make everybody else better. While this is not true in absolute terms, I do believe there is a very strong reason to believe that competition and cooperation are how we should conduct business. Both games I have just described are inverses of each other in the sense of how they view competition, which is why I decided to use them as examples. When you look at real life, there is some evidence to show that the economy does function as a zero-sum game. Let me use housing as an example: the NYTimes estimates that about 28% of the overall housing stock in NYC is rent-stabilized, with a small portion of that as rent-controlled. Rent-controlled apartments are the best apartments from a price perspective for the tenants as landlords are limited to what they can charge tenants for rent. Those who obtain these apartments are fortunate while the majority must pay higher rents as there is a supply shortage in the city. I will not discuss the benefits and drawbacks to the NYC housing market that these types of apartments have, but I want to illustrate an example of what a zero-sum looks like in a real life scenario. There are many other examples to showcase this and shows how some may see the business world as one where wealth can only be taken, not created. Therefore, this goes back to professor Davidai’s point on why some believe the economy is a zero-sum game.
For why market economies are not zero-sum, there are few things to point out. One, people have different levels of utility and value different baskets of goods and services differently. In Monopoly, everybody will value the Boardwalk property (or basically any property) because it gives one the best chance at earning the most money; there is no rational argument you can make to pass on it if you have the money as there is a finite amount of properties to buy. In Catan, one may value iron ore over lumber more in order to build certain things and this is one evidence point on why the markets are not zero-sum. In addition, think about the amount of wealth and technological advancements that have been made using trade and cooperation. Life expectancy has steadily been increasing around the world in both developed and undeveloped nations, we are more connected than ever through certain media and electronic devices and the global poverty rate has continued to decline since the beginning of the 21st century. Now, it would be ignorant for me to ignore the negative externalities that come with these developments, but it is important to understand that wealth is not fixed. According to the World Bank, since 1990 to 2021, the percentage of people globally who now have electricity has risen from 73.4% to 91.4%. This can be largely attributed to a study that shows how “globalization offer technological innovation, financial resources and international cooperation opportunities to achieve universal electricity access." While everything in life is measured on a relative basis, I do not see clearly how one can argue that the world is zero sum when the pie has been growing, not one size to split. Of course, the pie may not be evenly divided as some economists and researchers may suggest, but I take on the view that people have largely benefited from the participation of trade and cooperation with others.
I am a firm believer that not every single action between certain parties has to involve trade offs. It fails to account that parties involved may find it beneficial for different reasons and that overall utility may be satisfied given different indifference curves. As stated, Monopoly explains that since money and housing supply is never increasing or decreasing, there is no need to help those around you. This leads to unethical behavior and will only lead to distrust from others when conducting business. This is not how business should be done and do not believe this is very sustainable in the long-term. The world should not compete like that, with Catan showcasing that working with others may just benefit everybody around you. To end, I would like to end with a famous quote by a familiar previous U.S. president, which I hope you can reflect on when thinking about your next competitive encounter with others. I do believe it holds true in life and that one's actions can always benefit not just yourself but others as well.
“The rising tide lifts all boats.” - John F. Kennedy
Sources
“Access to Electricity (% of Population).” World Bank Open Data, data.worldbank.org/indicator/EG.ELC.ACCS.ZS. Accessed 19 Jan. 2024.
Goldberg, Gary. “Why Nobody Wins with a Zero-Sum Mindset.” Rolling Stone, Rolling Stone, 7 Jan. 2022, www.rollingstone.com/culture-council/articles/nobody-wins-zero-mindset-1277821/.
Noumba a, et al. “Assessing the Role of Globalization for Universal Electricity Access.” International Economics, Elsevier, 6 Apr. 2023, www.sciencedirect.com/science/article/pii/S2110701723000276.
Parogni, Ilaria, and Mihir Zaveri. “Understanding Rent Regulation in N.Y.C.” The New York Times, The New York Times, 22 June 2022, www.nytimes.com/article/rent-stabilized-apartments-nyc.html.
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