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Game Theory Framework Provides Insight into Consumer Behavior

Min Ding argues for a game theoretic framework even when strategies and outcomes are confined to the same individual (see the article "A Theory of Intraperson Games" in the April 2007 JM issue). In other words, such a game does not involve multiple players, but multiple selves of one player.

The concept advanced is intriguing. Ding proposes a theory of intraperson games (TIG) and draws on psychological, psychiatric, and artificial intelligence domains for supportive rationales. This theory posits two types of intrapersonal game players: the efficiency agent and the equity agent. Ding also provides an empirical application of TIG to variety-seeking behavior. Finally, he offers thought-provoking ideas for additional research.

This article raises interesting questions about consumers’ decision-making behaviors. For example, consider widely accepted notions that (1) personality traits are invariant over time and (2) key individual difference variables capture stable elements of consumer heterogeneity. If a strong personality trait in an individual implies the consistent dominance over time of one self over others, do intraperson games work less well for that individual? Similarly, if different consumers have different (but stable) levels of an important enduring characteristic that defines their self-identities, what are the implications for predicting strategies and outcomes of intrapersonal games within each consumer?

I am sure JM readers will have many additional thoughts and insights to share about this article. I welcome JM readers to join this blog discussion thread.

Siva K. Balasubramanian
Journal of Marketing Web Site Editor

Comments

I want to thank JM for providing a place for people to talk about something that is very close to my heart.

I had a lot of FUN working on this paper, and I certainly hope this will lead to additional research and publications on this topic, both theory and applications. I also hope these papers will be written by people other than me.

Personally, I practice what I said in the paper, and consciously manage the equity and efficiency of the many selves within me in situations including, but not limited to, my purchasing decisions in daily life. It's actually quite useful!

I look forward to reading comments at this forum, and share my two cents on your thoughts.

Min

Perhaps there is nothing new under the sun. We have all been exposed to metaphors about “talking to yourself:” we argue the many sides of a question internally, with different internal advocates coming up with different positions. And then, somehow, most of us (humans, not avatars) come up with a decision. In the consumer choice domain, most of us resolve these internal conflicts and make a purchase decision. (Although I have certain family members who seem to be in almost endless internal conflict when deciding what to order at a restaurant, but that is a discussion for another time). Most of the theory and modeling surrounding consumer behavior ignores the resolution process of internal conflict…yet all of us seem plagued by “on the one hand…on the other hand”…whether we are considering what to eat for dinner or what house to buy. The big idea in Min Ding’s paper is that he recognizes that consumer choice can be framed as the resolution of internal conflict as opposed to some unconflicted utility maximization process. We all know we have many selves, all demanding attention and primacy, with some winning out sometimes and others winning at other times. So what? Min Ding gives us just a peek at some of the implications…..but I, for one, am challenged to reconceptualize all I think I know about modeling the evaluation and choice process. Perhaps we have a whole new set of concepts and tools here. How valuable will they be? Too soon to tell. But isn’t it refreshing to see at really new idea in a domain plagued by minimal imagination?

The really nice thing to me, as a behavioralist, about Min's paper is that he formalizes ideas that psycholgists and consumer behavior researchers have been writing about for a number of years now, for example the idea of different selves. I particularly like how he accounts for the fact that there is conflict among these selves. Most of the behavioral research has focused on what happens when different construals are activated. I see Min's work as looking at how conflict is resolved when multiple construals are activated. I look forward to seeing where these ideas lead marketing scholars.

I have long been puzzled by the abstraction of firm boundary agents as playing a singular role of a businessperson in both economics and management literatures. This assumption ignores the social nature of firm boundary agents as human beings and thus renders the modeling of their inner conflict management as the psychological mechanism of their responses to external stimuli simplistic or unnecessary.

Min’s paper describes a more realistic and appealing model of people (consumers or businesspeople) assuming multiple selves when making important decisions. His classification of efficiency agent and equity agent as a framework of human selves seems to fit into many life or research scenarios, because as a social being, a person gains utility not merely from his/her own benefits but from adding to or not deducting social others’ benefits. In family purchase decision making, a husband may have to persuade himself not to be too assertive to appease his wife. Prior research typically relies on spousal demographics to predict spousal decision behavior while lacking a psychological framework to look at spouses’ self-persuasion in family decision conflict. As another application, this framework might be used to shed light on interpersonal trust research. Although trust has been seen as a governance mechanism that works to reduce transaction costs, little has been done to show why and how the trustee (such as a firm’s boundary agent) would refrain from being too opportunistic. Intuitively, based on the singlar assumption, he/she has to behave to maximize his/her firm’s interest according to his/her businessperson role; but why he/she acknowledges the trustor’s goodwill and responds accrodingly to reduce opportunism? Min’s intrapersoanl game theory may provide a new lens for looking into people’s multiple selves to uncover the mechanism.

There are a few things that I think will benefit greatly from discussion and future research. So I just throw these out as my two cents:

On the theory side
(1) are there (potentially more general) conceptual alternatives to model the conflict of selves as the battle between efficiency agent and equity agent? The current framework comes from welfare literature and intuition as a parent. but may be there are other ways to do it. On the same note, do we need to restrict ourselves to only two high level agents?

(2) the equilibrium concept. I used the standard Nash, but my sense is that a specific equilibrium concept can be and probably should be developed specifically for intraperson games. I think this actually has more to do with a deep understanding of how the mind works, rather than pure math.

(3) cooperative games should be studied. A whole set of papers can be written on this topic, I think.

On the applications side
(1) what are the potential applications of the theory that can help further our understanding of consumer behavior? This could be done through a math model (as the parsimonious example in the paper), but I also think it could be simply based on the conceptual framework of the theory. For example, if we look at individuals as trying to resolve the conflicts between equity and efficiency agents, can we come up with new hypothesis about a lot of consumer behavior we are studying (which, by the way, I am definitely not an expert on)?

(2) I also think this is something absolutely relevant to studying managers. We tend to treat managers as rational individuals maximizing NPV for the firm, but we know in real life, managers have many things to consider that are very different from NPV. How do they make managerial decisions? I think TIG might help here as well.

A key aspect in managerial decision making concerns the various hats managers are likely to wear as they arrive at their decisions. Most work in the area is couched under the rubric of rational man or what Min refers to as the “efficiency agent.” Organizational theory literatures points to politics in addition to self agency and the age old folklore of reality being more complex than what is captured by the efficiency agent becomes apparent. By recognizing and modeling the “equity agent” as well Min’s work provides a means to move forward with mathematical theoretical models while studying managerial decision making. I see immense potential here and hope to pursue some research myself.

Min’s theory of intraperson game (TIG) is one of the most elegant, useful theories I have read in the recent JM issues. TIG is applicable to almost all aspects of marketing. The co-existing efficiency and equity sides of a human being might explain many seemingly conflicting findings in marketing. The theory undoubtedly has huge potential for future research.

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