Of schellings work were published in his book the

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of Schelling’s work were published in his book, The Strategy of Conflict (1960), which became a classic and has influenced generations of strategic thinkers. Other researchers have extended several of the concepts in Schelling’s book. His ideas regarding credible threats and limitations on one’s own alternatives were later formalized by Reinhard Selten, an Economics Laureate in 1994. Schelling’s formulation of the prerequisites for cooperation has elicited extensive research on the origins and development of cooperation over time between parties who initially lacked confidence in one another. Schelling was also concerned with the ability of individuals to coordinate their behavior in
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2 (4) The Prize in Economic Sciences 2005 The Royal Swedish Academy of Sciences situations without any strong conflict of interest, but where unsuccessful coordination would give rise to high costs for all parties. In his research, including classroom experiments with his students, Schelling found that coordinative solutions – which he called focal points – could be arrived at more often than predicted by theory. The ability to coordinate appears to be related to the parties’ common frames of reference. Social conventions and norms are integral parts of this common ground. Schelling’s work in this area inspired the philosopher David Lewis to specify the idea that language originated as a means of coordination. Why Does Segregation Arise? A recurring theme in Thomas Schelling’s research is: what happens when individual plans and patterns of behavior are confronted in the social arena? The title of one of his most widely read books, Micromotives and Macrobehavior (1978), reveals the overall theme. The book addresses dif- ferent everyday phenomena such as professional ice-hockey players’ use of helmets, audiences’ choice of seats in an auditorium, and racial and sexual discrimination. Segregation is usually associated with oppression. Historically, this has been an important part of the explanation, but segregation is also a stable phenomenon in developed societies, where considerable effort is devoted to counteracting it. Schelling formulated a simple model where he assumed that all individuals are tolerant in the sense that they willingly live in the proximity of people with a different culture, religion or skin color, but that they want to have at least a few neighbors that share their own characteristics. If not, then they move to a neigh- borhood where they can find more people like themselves. Schelling showed that even rather weak preferences regarding the share of like persons in a neighborhood can result in strongly segregated living patterns. In other words, no extreme preferences on the part of individuals are required in order for a social problem to arise. Long-run Cooperation While Tomas Schelling’s strength lies largely in his ability to introduce original ideas and concepts with a minimum of mathematical technique, Robert Aumann’s primary contribu- tions consist of using the tools of mathematical analysis to develop concepts and hypotheses, provide them with concise formulations and draw precise conclusions. He once likened his
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