There's no other way to simulate a personality than through conscious choice, so that's what we do. It's not going to be perfect, but it is how it's done.
There are plenty of ways to simulate a personality other than through a conscious choice to cultivate and act out a particular personality.
Moldvay Basic simulates the bravery of NPCs and monsters by assigning moral scores.
Gygaxian AD&D simulates the loyalty of NPCs by assigning loyalty scores.
Thinking about some more modern games:
* 4e encourages STR paladins to be valiant by giving them the attack power Valiant Strike, which grants a bonus to hit equal to the number of adjacent enemies;
* Marvel Heroic RP helps make Nightcrawler be a romantic rogue by awarding XP to Nightcrawler's player for wooing and the like;
* Burning Wheel makes action resolution in key situations hard to succeed at without spending metagame resources, and those resources are earned by making choices that express various character traits (the PC-build rules for BW include multiple complex and sometimes overlapping systems for establishing character traits; and there are also rules for how these change over the course of play).
The "modern" examples are why, quite a way upthread in reply to [MENTION=205]TwoSix[/MENTION], I said that I think those sorts of games fall more into the "function-oriented" than "cultivate a personality" style of RPing. A player who is playing Nightcrawler in MHRP, for instance, doesn't need to think "What sort of personality will Nightcrawler have?" Rather, upon reading the sheet and seeing that XP are earned for wooing, the player is already motivated to say (as happened in the first of my MHRP sessions involving Nighcrawler) "OK, we go out to a bar looking to pick up!"
In BW, which doesn't depend in the same way on pre-written character, the player has to make his/her own choices about character traits. But these aren't generally things like "Hates fish". They're things like "I will free my brother from possession by a balrog". When the GM then confronts the PC with the possessed brother (as happened in my BW session a month or so ago), the player doesn't think about cultivating a personality. The player thinks about how to free the brother from possession, and how to reconcile that with a promise made to another PC to help kill the brother. The player is engaging the game making conscious decisions about how to achieve PC goals and overcome obstacles to them (which the GM has deliberately placed there); not decisions about how to portray the PC's personality.
This passage from
Christopher Kubasik's "interactive toolkit" essay seems apposite:
Characters drive the narrative of all stories. However, many people mistake character for characterization.
Characterization is the look of a character, the description of his voice, the quirks of habit. Characterization creates the concrete detail of a character through the use of sensory detail and exposition. By "seeing" how a character looks, how he picks up his wine glass, by knowing he has a love of fine tobacco, the character becomes concrete to our imagination, even while remaining nothing more than black ink upon a white page.
But a person thus described is not a character. A character must do.
Character is action. . . . [T]he best way to reveal your character is not through on an esoteric monologue about pipe and tobacco delivered by your character, but through your character's actions.
But what actions? Not every action is true to a character; it is not enough to haphazardly do things in the name of action. Instead, actions must grow from the roots of Goals. A characterization imbued with a Goal that leads to action is a character.
Also this from
Eero Tuovinen:
[O]nce the players have established concrete characters, situations and backstory in whatever manner a given game ascribes, the GM starts framing scenes for the player characters. Each scene is an interesting situation in relation to the premise of the setting or the character . . . The GM describes a situation that provokes choices on the part of the character. The player is ready for this, as he knows his character and the character’s needs, so he makes choices on the part of the character.
In the "modern" games I've described, the process of PC building (or, in MHRP, PC selection) already establishes the character's goals and needs; so, when the GM confronts the player with a need to choose for his/her PC, the player doesn't have to consciously cultivate a personality. Rather, s/he has to make a choice about what the PC does, driven by his/her judgement of how the situation that is presented interacts with the resources s/he has ready-to-hand and the game's resolution system.
It's very different from what is described in the 2nd ed AD&D PHB.