Micromotives and Macrobehavior — Thomas Schelling on the Locks and Meshes of Economics

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Micromotives and Macrobehavior — Thomas Schelling on the Economics of Sorting, Mixing & Interlocking

Contingent behavior

Have you ever paid attention to the seating arrangements at different venues? People are willing to pay good money, for instance, for front row seats at a concert hall, theater, or sporting arena. In fact, students pay even more money to attend college. Yet when it comes to their seating patterns, many seem to do just the opposite, congregating instead around the back of their lecture hall. It goes without saying that different people apply different rules to different settings.

Sometimes these rules are straightforward. At a concert or sports game, people want to be as close as possible to the performers, given their budget constraint. Other times, the rules are more complex. At a lecture hall, it might be that people want to sit as near as possible to the lecturer so long as they are not in front of everyone else, perhaps in fear that they might be called upon to answer a difficult question.

As Thomas Schelling observes in Micromotives and Macrobehavior, lecture seatings are a microcosm of the spatial distributions and “purposive, contingent behavior” we observe in society. It describes how simple, context-dependent rules at the individual level may lead to peculiar arrangements among the collective. Complex phenomena can emerge from these interactions because the preferences and actions of one person depend on the preferences and actions of others, and vice versa.

Sorting and mixing

Lecture hall arrangements are a trivial case, of course. But microinteractions and macrobehaviors show up everywhere. At an engagement party, for instance, the respectives families of the bride and groom, who are meeting for the first time, might self-organize themselves into two groups at either end. This may seem rude at first, but each member is simply applying a behavioral rule along the lines of ‘stay close to someone you know well’. This leads in turn to separate herding. This may continue until the couple forces their respective families to mingle awkwardly into the night. Similar issues may sometimes arise among young children at the school dance, colleagues at a networking event, or disparate friendship groups at a birthday party.

Indeed, as Schelling points out, unplanned sorting and mixing occur on even greater scales because people are “separated and integrated” by language, culture, status, politics, religion, demography, hobbies, history, profession, and many more dimensions. For one example, Schelling points to the sorting that takes place in somes churches. If people prefer, for example, to attend a church that has more members that share in their culture or ethnicity, then segregation may take place over time. Moreover, if this church is a place for sharing job vacancies, rooms for rent, community events, and related opportunities, then the segregation will extend into other domains. So it is perhaps not surprising to find a degree of homogeneity among communities, occupations and postcodes.

Constraints and invariances

To understand the dynamics, Schelling says it helps to look for simple but persistent constraints in behavior. If people dislike being in the minority, then both the minority and majority may self-organize into separate groups or coalitions. This happens in sporting leagues, where bad players and strong players are less likely to enjoy playing together. Sporting divisions emerge in part for this reason. The same may also apply to political leanings, hobby groups, school grade levels, and so on.

It can also help to look for invariances in the problem. Schelling asks readers, for example, to consider what might happen to the gender distribution of the population if every expecting couple wishes to have a baby girl, and continues to have children until the first girl is born. It may appear at first that such a cultural preference is distortionary. But if you draw out the permutations, as Schelling explains, then it is clear that such a “stopping rule” cannot change the proportions of a large population because each subsequent birth is equally likely to be a boy or girl. (Although the problem is complicated if families choose to abort pregnancies that do not suit their gender preferences.)

Unraveling reactions

The constraints and mechanisms in these problems, Schelling notes, may contain “unravelling” processes and “chain reactions”. They can be a mixture of self-settling and self-amplifying effects. For example, if there are talented and lazy employees in a firm, and the talented workers want to work with other talented workers, then resignations from the talented camp may spur other talented workers to quit. The increase in ratio between the lazy and the talented may then spur other disgruntled workers to leave as well. This process might continue until only lazy people are left in the firm. 

Similarly, if people wish to be above average in some dimension, then it is possible for runaway behaviors to take place. Consider, for example, the arms races that arise in schools, sports, businesses and nations as students, athletes, entrepreneurs, and nations strive to outdo their counterparts. This dilemma is especially troubling because by definition not everyone can be among the best or most successful. Society is doomed to a lot of unhappiness if everybody wishes to be richer, smarter, or more successful than the majority. How we frame our objectives and preferences as individuals can drastically alter the behavior and outcomes of the collective. 

Interlocking and overlapping

Moreover, Schelling reminds us that these constraints, invariances, and mechanisms share a great deal of “interlocking”. Perhaps the most immense example here is language itself—an invisible amorphous agreement that we all partake in and contribute to. Words and phrases are born into prominence, or wither into oblivion, when groups of people share in their use or disuse. The entire process is highly interdependent and sometimes arbitrary. The quark is called a quark because its mischievous originator, the physicist Murray Gell-Mann, believed that the sound ‘kwork’ was fitting for an elementary particle in physics. And so we call it a quark today because others do too.

The reach and interlockingness of language, however, is even greater than that. Language constrains and is constrained by the interactions of individuals, and the behavior of the collective. Not only does it shape what you hear and say, it influences where you will live, where you will work, who you will marry, who you will befriend, and so much more. Yet all of this locking and sorting is happening without some grand overseer. As Schelling notes, “the consequences are aggregate but the decisions are exceedingly individual.” The networks of information, communication, community, and so on, are deeply intertwined. They influence the course of industry and politics without our full realizing.

Colonies and markets

Evolutionary biology is no stranger to such micro-macro phenomena either. Over geologic time, Darwinian competition, mutation, and selection has led to a bewildering array of biological complexity and organization. On another front, the systems for society that we’ve talked about so far, Schelling notes, are not dissimilar to the behavior of ant colonies in nature. No one ant or human can fully design or understand the organization of which it is a part. We rely instead on a set of context-dependent rules, signals, and interactions to go about our daily lives. Somehow, the colony that emerges, Schelling writes, “is full of patterns and regularities and balanced proportions among different activities.”

Right now, with a global population of eight billion people, we continue to self-organize ourselves into increasingly complex and interconnected networks and chains. From raw materials to manufacturing to logistics, just think about all the little things that need to go right for you to take a flight to another continent, or to read this article on your phone or desktop. Even the chair you are sitting on right now emerges from an interlocking process that few can describe in detail. I myself cannot help but agree with Schelling when he says that “if you are in a mood to be amazed, it [should] amaze you that the system works at all.”

Sources and further reading

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