Schelling's Game Theory: How to Make Decisions

By Robert V. Dodge | Go to book overview

CHAPTER 14
Coordination

In Britain and many former British colonies drivers keep to the left side of the road, while the United States follows the somewhat more common practice in which drivers keep to the right side of the road. About 34 percent of the world’s drivers drive on the left side of the road while 66 percent drive on the righthand side.1 One might ask why this is so. The answer, at times, is offered in historical context and involves reigns and passing horses and ruts being deeper in roadways running away from quarries than those to them during the days of ancient Rome. Following the French Revolution it was ordered that the horsedrawn carriages that carried the elite through the crowded streets of Paris must pass on the right, while pedestrians pass on the left. The pre-Revolution custom had been the reverse, with the carriages on the left and the pedestrians on the right. Changing was symbolic of the new order established by the Revolution, and going on the left had been identified with privilege, while going on the right had been for the common man, so it was more “democratic,” and appropriate that those with carriages embrace the sentiment.2

But the simple truth seems to be, people in most countries drive on the righthand side of the road because everyone else drives on the right-hand side of the road. The converse is true in the third of the world where people drive on the left side of the road. That is, they do so because everyone else is doing so. This is a matter of convention, a generally agreed on way of doing things. People coordinate their behavior in a self-enforcing system, demonstrating that “orderly anarchy” is not a contradiction in terms. The machinery of state and rule of law are not always necessary to maintain social order. The idea of individuals governed by self-interest in a self-regulating market system, where the “invisible hand” of the institutions of the market promotes public interest, is no longer a view accepted by modern economists. Modern economists see the market as an imperfect system in need of varying degrees of government regulation and interference to limit the damage that can be done by individual actors in the market who have only their own interests in mind.

Schelling discusses self-enforcing conventions and how it is that things like one-way street signs need no enforcement by police. He believes that many rules, whether good or bad, are better than no rules at all, and conventions that help

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