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
The Theory of Information
That was a message found in a half-broken bottle that washed up a shore near a Croatian beach. It had spent nearly 23 years at sea, from the time of writing to the time it was finally found. Who Jonathan and Mary were, and what the message actually means,…
What Now For The Higgs Boson?
We are on our way to CERN in Geneva, and this is John Mark, the cameraman. Hi! And, uh, we should be coming up on it. That’s the Dome; that’s the famous CERN Dome up ahead. This is pretty exciting! On July 4th here at CERN, a historic announcement was mad…
Traveling to the Rainforest with Gisele | Years of Living Dangerously
We’re in Alta Floresta, State of Mato Grosso in Brazil, on a boat going up the river with Giselle. Giselle has been in the Amazon before, but it’s new to her to be a correspondent, to be a reporter, and not just to be the subject of the story but to be an…
How to sell a $14M private jet.
What kind of a budget is your client looking to be in? What’s the maximum range you’re trying to reach? What city pairs? So, I mean, it depends on, you know, how old of an airplane your client’s willing to purchase. If you wanted a Legacy 600, you could …
THIS Made Me Change My Mind About Bitcoin | Anthony Pompliano
You and I had some epic showdowns on television. You called it everything from crypto garbage, uh, to one time you forbid me from owning any more of it, uh, but I think that there’s a lot of changes that have happened in the market, both from a regulatory…
Motion problems with integrals: displacement vs. distance | AP Calculus AB | Khan Academy
What we’re going to do in this video is start thinking about the position of an object traveling in one dimension. To get our bearings there, I’m going to introduce a few ideas. So the first idea is that of displacement. You might use that word in everyd…