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Schelling's Game TheoryHow to Make Decisions$
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Robert V. Dodge

Print publication date: 2012

Print ISBN-13: 9780199857203

Published to Oxford Scholarship Online: May 2012

DOI: 10.1093/acprof:oso/9780199857203.001.0001

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(p.157) Chapter 14 Coordination
Schelling's Game Theory


Oxford University Press

People in Britain and the former British colonies drive on the left-hand side of the road while those in the U.S. and most of the rest of the world drive on the right. This chapter explores the development of such “conventions,”—rules that organize society that do not require the force of authority to see that they are followed. It discusses Schelling's ideas on coordination and is based largely on Robert Sugden's work. It presents the development of spontaneous order with the “crossroads game” matrix. This shows drivers approaching crossroads having options of maintaining speed or slowing down. Asymmetries will be noticed, and eventually “smart” drivers will establish a pattern that “dumb” drivers learn. Schelling notes that Sugden is a Libertarian, and has interest in showing that a government may not be necessary for an orderly society to function. Sugden comments on Kenneth Arrow, who he said had believed that the free market would effectively deal with medical care without government interference, but who turned away from his faith in the market mechanism. The supplement to this chapter includes a column by Paul Krugman on the need for government that references Kenneth Arrow, entitled “Why Markets Can't Cure Health Care.”

Keywords:   coordination, convention, taboo, signaling conventions, crossroads game, Robert Sugden

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