Thomas Schelling is a famous American economist who received the Nobel Prize in Economics in 2005. He was awarded the prize for his in-depth study of the problems of conflict and cooperation using game theory. He worked at the University of Maryland.
Economist biography
Thomas Schelling was born in Auckland, California. He was born in 1921. He received his higher education at once at several leading universities in the country: first, a bachelor's degree in California, and then a doctor of economics at Harvard.
Thomas Schelling began his career in government organizations. Immediately after World War II, it was the Federal Budget Bureau, then the Bureau for the implementation of the famous Marshall Plan. He worked in it under the leadership of the American diplomat William Harriman in Copenhagen and Paris. When Harriman became US Secretary of Commerce, Schelling, through his patronage, joined the White House as an international trade expert. He was in this post from 1951 to 1953.
When the presidential administration was changed in Washington in 1953, he lost his post and concentrated on the career of a professional economist. At this time, he becomes a professor at Yale University. He has been working there for five years and begins to develop his first economic theories.
From Yale, Schelling moved to Harvard in 1958. This becomes his alma mater, in which he works until 1990.
Assistance to the US Government
After leaving the White House apparatus, Thomas Schelling continues to advise the American government on economic issues. For example, he takes part in the work of the so-called "brain centers", one of them in 1969 created at the John F. Kennedy School of Management at Harvard University.
In 1971, he became a laureate of the Frank Seidman Prize, which was awarded to scientists for their contribution to the political economy, which led to an improvement in the well-being of mankind.
In 1991, Schelling became president of the United States Economic Association, by then already being a Nobel laureate in economics. He was also a professor of political science and economics at the University of Maryland, as well as an honorary professor of political economics at Harvard.
Thomas Schelling passed away in 2016 at the age of 95.
Scientist works
For Schelling, as well as for many institutionalists of his generation, it was important to engage in thematically diverse studies. At the same time, there was a unifying moment in his work, this is a general methodological approach.
The hero of this article sought to study the strategic rational behavior of a person - when people strive to maximize their benefit not this very minute, but over a long period of time.
Schelling studied this type of behavior through game theory; he himself is one of its founders. It was for these studies that the American economist received the Nobel Prize.
Interestingly, this was already the second prize that the committee awarded for the study of game theory, although usually it does not. The first laureate for research in the related field was the American mathematician John Nash. In 1994, he was awarded the Prize in Economics for pioneering research on the analysis of equilibrium in the theory of non-cooperative games.
What do meaningless actions lead to?
Of great interest is Schelling’s book, Micromotives and Macro-Behavior. In it, the author analyzes the behavior of an individual who does not even suspect what his actions may lead to, which at first glance seem meaningless.
In combination with the actions of other individuals, he considers micromotives and macro-choices, which lead to significant consequences for the largest groups.
Principles of rational interaction
Undoubtedly, the influence of the Nobel Committee in determining the winner of the prize in 2005 was exerted by Schelling's most famous work, entitled "Conflict Strategy." He wrote it back in 1960. In it, the economist formulates most of the basic principles of the strategy of the most rational for a person strategic interaction.
According to Schelling, the so-called focal points begin to form between the “players” over a long period of time. So it denotes mutually beneficial solutions due to knowledge of the mutual preferences of the parties.
It is important that at the same time one of the parties to the conflict is able to strengthen its position by providing reliable obligations. This is convincing evidence that he will continue to follow the chosen strategy, in spite of possible changes in the basic conditions.
In “Conflict Strategy, ” he cites the nuclear arms race as an example, when all participants benefit from the concept of automatic retaliation. In this case, it is not the cities themselves that become the objects of protection, but rocket mines, which can be located outside them.
As a result, in the process of negotiations between the parties there is a bluff, which is extremely beneficial for them to use. With its help, one of the parties significantly strengthens its position, while hiding its own awareness of the possibilities and positions of the opponent. If we take the example of nuclear weapons, then in the negotiation process it may be beneficial to intentionally portray disbelief in the probability and desire of the enemy to strike automatically.
Political Science Analysis
In addition to purely economic, Schelling studied deeply the problems of the modern political economy, conducting a detailed analysis of political science problems. The object of his research was strategic interactions in various areas of human behavior.
For example, in the study of organized crime, he came to the conclusion that its goals mainly coincide with the main goals of human society. Its participants are also interested in minimizing the killings that could provoke increased police attention. Based on this point of view, the preservation of criminal communities may be more profitable for society than a war against the mafia.
It is important that Schelling was one of the first to study sociocultural issues. He studied the formation of the ghetto in terms of the formation of territorial segregation.
