yego.me
💡 Stop wasting time. Read Youtube instead of watch. Download Chrome Extension

Schelling Point: Cooperating Without Communicating


2m read
·Nov 3, 2024

Let's talk about the shelling point. Shelling point is a game theory concept made famous by Thomas Schelling in the book called "Strategy of Conflict," which I do recommend reading. It's about multiplayer games where other people are responding based on what they think your response is.

What he came up with was the mathematical formalization of how do you get people who cannot communicate with each other to coordinate. Suppose that I want to meet with you, but I don't tell you where, and I don't tell you when. We both want to meet, but we cannot communicate any more information to each other. That would sound like an impossible problem to solve. We're done, we can't do it.

Not quite, because I know that you're a rational person, and smart and educated, and you know I'm a rational person who's smart. We're going to start thinking, well, if we have to pick an arbitrary date, we're probably going to pick New Year's, and what time? Midnight, or 12:01 a.m. And where would we meet? What is a big meeting point? Well, if we're Americans, it's probably in New York City. It's the most important city, and if we're in New York City, we'll meet at midnight, probably Grand Central Station under the clock. Maybe you end up at the Empire State Building, but not likely.

So, you can just use social norms to converge, in this case, onto a shelling point. There are many times in many games where you can look at the game itself, whether it's business, art, or politics, and you can find the converging shelling point within the context of that game, and so you can cooperate with the other person.

Here's a simple example: let's suppose that you have two companies that are competing heavily with each other, and they hold an oligopoly. Let's say that they're competing right now, and the price fluctuates between 8 bucks and 12 bucks for whatever the service is. Don't be surprised if they both converge on 10 bucks without ever talking to each other.

More Articles

View All
Radians as ratio of arc length to radius | Circles | High school geometry | Khan Academy
What we’re going to do in this video is think about a way to measure angles. There’s several ways to do this. You might have seen this leveraging things like degrees in other videos, but now we’re going to introduce a new concept, or maybe you know this c…
How we keep track of every private jet on earth!!!
Know every airplane that’s out there for sale. We know every detail about it, and we know who’s representing what buyers and sellers. You need technology and you need data. But once they get in here, if you don’t get to keep their attention, you’re going…
3 Mistakes You Make When You're Starting Out (& How to avoid them)
You know, some mistakes are almost unavoidable, especially when you’re just starting out on a new project or business. It takes a lot of trial and error to get to a point where most things you start manage to hit the spot on a consistent basis. These are …
SPOT THE FAKE !! -------- DONG
Hey, Vsauce. Michael here, coming from Kansas for the 4th of July. Why Kansas? Well, because out here you can do anything. You can even put a firework store next to a gas station. But enough about the real world, let’s talk about DONGs, things you can d…
What's in Hand Sanitizer? | Ingredients With George Zaidan (Episode 9)
What’s in here, what’s it do, and can I make it from scratch ingredients? Now, you might already know that the ingredient in here that kills germs is ethyl alcohol—or, as we purist chemists like to call it, ethanol—which is exactly the same molecule that…
8 Stocks Warren Buffett is BUYING
So I’m going to let you in on a well-kept secret in the world of investing. If you want to know what stocks you should be buying, look at what stocks the greatest investors in the world are buying. The number one investor you should be watching is none ot…