Economic Lessons from Settlers of Catan

The following is a guest post from Marotta Wealth Management. I've heard a lot of good things about Settlers of Catan, so I enjoyed this piece.

I've loved games all my life. Mostly I enjoy analyzing the game design and learning what makes a winning strategy. Profound lessons can be learned from the best of these games. And the principles you learn can help you succeed for the rest of your life.

Take "The Settlers of Catan" board game designed by Klaus Teuber. Like all great games, it has simple mechanics, but because the layout of the board is random, each game is unique and requires its own strategies.

Players start with two settlements, acquire resources, build more roads and settlements and upgrade their settlements to cities. Each settlement is worth 1 point; cities are worth 2. Players can gain 2 extra points by having the longest road or by buying development cards and getting the largest number of soldiers. Some development cards are also simply worth an extra point. The first player to get 10 points wins the game.

Players acquire resources (brick, lumber, wool, grain and ore) as two dice are rolled. Each hex represents one resource and has a dice number from 2 to 12. Players build their settlements and cities on the points where three hexes meet and receive resources when any of these three numbers are rolled. They receive one resource card for a settlement and two for each city.

Like many games based on the power of compounding investments, settlements and cities gain you resources, and resources allow you to construct more settlements and cities. This power of compounding is the fundamental lesson behind many games. The one who invests and gains the fastest is most often the winner.

What makes Catan particularly interesting is that just producing the most resources is not sufficient to win the game. You must have a different combination of resources to build a road or settlement, upgrade to a city or buy a development card. If you are missing one type of card, you do have the option of trading four cards that are identical to the bank to receive one of any other resource card. Having a fistful of the wrong cards is often not as good as having one of the cards you need.

One of the downsides of Catan is that sometimes the game is won or lost by the selection of the very first two settlements. And after a poor selection, it may take another hour of play for the player with the wiser placement to prevail. Thinking an hour ahead may seem impossible, but the same foresight is required for 30-year retirement projections as well.

About five different strategies can prevail in a Catan game depending on the frequency of resources on the board and the placement of trading privileges. I'm going to describe the one most frequently available and easiest to use to help you win games consistently. Even if you have never played Catan, the lesson is having the foresight to know what resources you need to accomplish each goal on the way to 10 victory points.

Each player starts the game with two settlements and two roads. Roads require one brick and one wood. We need to build just two more roads for our strategy. Most players assume that because they must build a road initially, they need to have a lot of wood and brick. But thinking through which strategy you are trying to use to get to 10 points shows this may not be the case.

Our winning strategy will be to build two roads and then two additional settlements. Each settlement requires four cards, one each of brick, lumber, wool and grain. Then we will upgrade each settlement to a city. To upgrade a settlement to a city requires three ore and two grain. We will need to upgrade four times. Four cities will give us 8 victory points, and we will get our final 2 victory points by getting three soldiers to take the largest army. Soldiers are one of the types of development cards. We should be able to get three soldiers if we buy three to five development cards. Each development card costs three resource cards, one each of wool, wheat and ore.

Adding up all of the cards necessary to win using this strategy, it requires a minimum of 4 brick, 4 lumber, 5 wool, 13 grain and 15 ore for a total of 41 cards. If more than three development cards are needed to get three soldiers, additional wool, grain and ore will be needed. Each winning strategy has a different collection of resources needed to win. For example, if you are trying to win by getting the longest road, that strategy requires a minimum of 10 brick, 10 lumber, 4 wool, 8 grain and 6 ore for a total of 38 very different cards.

Knowing what mix of resources you need to meet your objectives is critical. My favorite strategy requires mostly ore and wheat. Setting out to win with the longest road requires mostly brick and lumber.

Most players simply try to maximize their numbers of cards regardless of the type of resource. Perhaps they have an abundance of wool and brick, but nothing can be built with wool and brick. As a result they need three or four times as many cards as the player who ultimately wins. You must keep your goal in mind as you make your first moves because they cannot be undone.

In my favorite strategy your first placement should be to maximize ore with a secondary resource of wheat. If the third choice is ore, wheat or wool, so much the better. Point your roads toward the outer edge of the board so other players won't block your building. You are only going to build one additional road for each of your settlements, so it is not very important what lies beyond one road away. While you are waiting to trade for the brick and lumber to build those roads, you can be upgrading your settlements or buying development cards.

If the cards you buy are not soldiers, they may help you by allowing you to build roads or collect two of any resource you want. Because your strategy involves buying development cards, you may overcome any weaknesses in your placement by the cards you purchase.

Like Catan, the best games teach us principles in less than an hour that life teaches us much more painfully over years of calendar time. Having made your first settlement placement incorrectly in Catan, you have to endure another uncomfortable hour as your opponents outperform you. Locking up your investments, your vocation or your life on a path that won't meet your goals is a serious misfortune that is in your power to avoid. It simply requires analyzing the mechanics of the game and your goals before making your first moves.

Comments

[Luis]

This just reinforces why I love FMF postings better than anyone else :')

[Money for College Pro]

This is an awesome game. My friends and I love playing it, and have become quite competitive at it. It is amazing the life lessons you can learn from a good board game!

[Rick Franics]

I didn't like this post even though I do like The Settlers of Catan- I thought there was far too much of the article on the game itself and that the analogy was stretched.

Yes initial mistakes will hurt you in life, but it is possible to change. Moving, switching careers, ending relationships etc. are all possibilities. Also, there is no one simplified goal in life. You can't analyze life and come up with a winning strategy because your goals in life are likely to change, and strategies that work in life change too.

-Rick Francis

[Kimberly]

My husband and I love this game and often teach high school students in our church. I am convinced it makes them smarter and am so proud when one of them legitimately wins over us!

Anyway, the writer fails to to mention the power of suggestion. We often find in our games that people can be swayed to make certain decisions based on opinions stated by other players. This too has real life application as I see others my age swayed by peer or parental opinions to make both good and bad decisions. Interesting article and i find we might use similar tactics.

I think the best of this game! Genius.

[LotharBot]

When it comes to resource choice in Catan, you also have to pay attention to what resources are going to be scarce -- as having those resources will give you a trade advantage over others.

For example, I once had a board where the wood hexes were on 2, 3, 12, and 6. 2, 3, and 12 are all unlikely rolls, while 6 is very likely. I put my settlements on opposite corners of the 6, which meant nobody else could settle there. Since I had a near-monopoly on wood, I could get other players to trade me anything I wanted 1-to-1 or even 2-to-1 in my favor.

Similarly, back in 2007-8, I was saving money to buy a house, but houses were ridiculously overpriced. The stock market also looked a bit overpriced. So I just held on to my cash -- and in early 2009, when people were desperate for cash, I was able to get great deals on stocks. By thinking ahead and accumulating a resource that other people were short on, I was able to make some big gains.

[Mike Hunt]

I've never heard of or played this game before but this article makes it sound like fun and I liked the analogy to successful investing.

Great article.

-Mike

[Mark]

Settlers is a great game for lessons in personal finance: decision making, optimization, scarcity, planning, resource allocation. Once you've mastered the basic game try exploring Cities and Knights. Once you have grown tired of Settlers look to other games with similar personal finance foundations: Chinatown, Puerto Rico, and Agricola to name a few.

PS I don't work for a gamemaker

[Eric]

I have worn out 3 physical board copies of this game and I play the iPhone application of it very often! Definitely one of my favorite games. I have long moved on to all of the different expansions to make the traditional game less stale. Love the post!

[101 Centavos]

I must lead a sheltered life, because I've never heard of this game. I've now put it on my Amazon wish list.

[Bret Larwick]

The strategy you outlined in your article is what I like to refer to as the "advanced beginner" strategy. It seems like everyone I've ever taught the game to flocks towards this strategy after only a few plays, and it can be easily countered by other players.

If you really want to become a good strategist at Settlers of Catan, you need to understand that there are 3 major strategies to the game.

1. Road Warrior - This player places to wood/brick primarily with wheat/sheep secondary. The goal of this player is to build the longest road while developing additional settlements faster than other players. This is a fast-start strategy that slows to a crawl once you've built your 5th settlement. Points 8-10 become much harder to achieve unless you can successfully switch strategies halfway through the game through new settlement placement.

2. Development King - As your article describes. Primary is rock/wheat with a secondary of sheep. Goal is to build into cities and development cards. This is a slow-starting strategy that relies on trading to be successful. In tournament environments or against strategic players, your trading will be shut down and you will have a very difficult time getting off the ground. If you can successfully build out to a 3rd or 4th settlement early enough, this becomes a solid strategy to reach the end.

3. Resource Controller - With this strategy you focus on controlling 1 or 2 resources in the game that nobody else has or it is exceptionally scarce amongst the other players. This strategy also focuses on occupying the accompanying harbor to trade at 2:1 for all your building needs. This strategy often falls prey to the robber, as you will make lots of enemies quickly in the game and everyone will want to steal from your hand.

The most successful players I've seen are ones that understand all three of these strategies and do not get tunnel-visioned into a single niche. It is a game dependent on the players you are playing against, and as such you need to change and adapt. Successfully moving from one strategy to another strategy is key.

Also, initial placement is important as well. You want number diversity, number strength (I often find 5's and 9's are better than 6's and 8's due to the robber draw the latter numbers get), and resource diversity whenever possible.

Good luck players!

[Brian Heins]

Catan is a great game, and a great series. I play all the expansions and variations of Catan and some of our own design. It's nice to read an article proclaiming the lessons of investment and risk management learned from games. I would venture to say most games are about risk management. In Catan it's easier to see the value of initial investment versus distribution than in other games like Monopoly or Cash Flow, because the market does not change and the statistics of dice rolls are visualized on the board. The most important thing that is not seen is the availability of resources which do not always match the statistical normals. So to "fix" this you can use what is called a "dice deck" which is a deck of cards of all possible rolls of 2 six sided dice, So it becomes a game of WHEN something is rolled instead of IF it is rolled, further helping you manage your risk.

[FMF]

Bret --

Thanks for the tips! I'll use them to ambush my family. ;-)

[B.J.]

Although some players like the "dice deck" mechanic that Brian discusses, please remember that this fundamentally changes the game. I don't think one version is better than another necessarily, but not all players like to play this way or think that the random element to the game that the dice provides is something that needs to be fixed. I always encourage people to try both ways of playing and see which way they prefer.