Thomas C. Schelling (1921–2016)

there are some interesting situations where seemingly simple individual behaviors aggregate to surprising and potentially disappointing collective results: hockey players given an individual choice will opt for no helmet, making themselves collectively worse off and begging for league-mandated helmets; homeowners with a slight preference to live near people who look like themselves will induce stark segregation that shocks their own consciences. if these examples are familiar it is because show more this book introduced them.

the style of reasoning used in this book is now so familiar that it was briefly a meme: you could say schelling was the original "it's time for some game theory" guy. but that would be unfair, i think: the meme is mocking a top-down, overly theoretic way of forcing the facts into speculative theories. in this book schelling is sensitive to the facts of concrete situations, working in a bottom-up fashion that starts with humdrum examples taken from life, adding more detailed observations to the model until he brings it to the breaking point.

one pleasure of the book is seeing a systematic thinker at work: when schelling is done modeling a situation, he begins turning the parameter dials to see what other interesting outcomes he can get in theory and considering what concrete situations they might describe. when he's exhausted those possibilities, he lays the various models out and organizes them into logical schema. even there he does not stop, but instead ponders the nature of these schema, their limitations, their general properties: where do these simple accounting identities come from? what are the limits of their application? what kinds are there for closed and open systems? why do they seem obvious only after we have used them for a time?

schelling has a unique mind and i may need to dip into his other books. show less

Thomas Schelling might be my new favorite economist, but the book used enough math to make my eyes glaze over. Although probably not intentional, the book thoroughly debunks the the idea that "the invisible hand" of the market always guides society to a socially good result. In particular, Schelling explains how somewhat innocuous racial preferences can lead to almost totally segregated neighborhoods.

(Full review at my blog)

Sometimes when you read a classic, it doesn’t offer much because its insights have been the building blocks for what came after. So too here—if you know any game theory, then very little here will be new (and there’s a lot of math) but that doesn’t mean it wasn’t vital. Also notable: we’ve come around again to deterring (or not) the Russians.

This is one of the most important books on Game Theory, and also, thankfully, one of the more accessible (certainly much more so than von Neumann's and Morgenstern's book).

His main theses are that not all games are zero-sum. That is, they are 'variable-sum', or dependent upon the strategies used. Not all actors are apparently rational, and some may act on seemingly irrational behavior in order to alter their opponent's responses. On the individual level, this could be the abusive lover show more threatening to kill themselves in order to keep you obedient to them. On the international level, this could be the North Koreans lobbing more missiles into the ocean to get more food. Decisions are interdependent upon the other's decisions.

Perceptions are also a vital component of decision making. Limiting information available to the opponent, or restricting their choices by other means, is a way to appropriately modify your own action. Strategy is not only a way of dealing with force, but also potential force.

In cooperative games, coordination is necessary. If communication is possible, then it would be best to aim for some point that you know that the other target might think of as being a valuable and important meeting point. These are now referred to as 'focal points', or, more recently, 'Schelling points'.

The idea of 'deterrence' has to have two necessary components: a conflict, and a common interest. Bargaining is a means by which both actors can find ways to benefit, but this becomes more difficult in areas of more open conflict, as the means of communication may become impeded. Therefore, a tacit communication or tacit bargaining - a scale of responses with which one communicates, up to and including armed force.

Some of these points may seem obvious now, fifty years later, but they seem even more important only because of how often they are overlooked. Schelling is important not entirely because of his mathematical analysis, but because how he also encompasses the human element in decision-making. The Cuban Missile Crisis, the ultimate 'game' of brinksmanship, coordination, and negotiation, only occurred two years after this book was published. Valuable reading for economists, politicians, and anybody who wants more than a passing knowledge of these games we play. show less