Even though it may feel like the holidays are over, another is just around the corner. Valentine’s Day is coming and it’s an opportunity for loved ones to express their feelings for one another with chocolates or assorted gifts. But what am I supposed to get my girlfriend? What is she supposed to get me? Obviously, we know each other’s tastes and preferences, but we need a way of making sure that we are both on the same page for how much we will spend on each other. If my girlfriend buys me a nice, expensive watch, and I give her a $5 Starbucks card, I will be in the doghouse until July. Thomas Schelling’s adaptation of game theory can give some answers to this.
Thomas Schelling, along with Robert J Aumann won the Nobel Prize in Economics in 2005 “for having enhanced our understanding of conflict and cooperation through game-theory analysis”. Schelling was able to show that if a player wanted to force a resolution to a potential conflict, they could intentionally remove options from the field, including ones that would make themselves better off. Doing this would force the other players in the game to change their strategies accordingly, which would be better for everyone involved. Schelling first became intrigued by the stratagems and negotiation observed in international bargaining while working as an economist for the Truman administration. He is most known for his book, The Strategy of Conflict, published in 1960, which ignited the study in what became known as “conflict behavior”. In the book, he introduced concepts like credible commitment.
Conflict, to Schelling, had a specific meaning. For Schelling, it was not enough to simply beat your opponent. He believed it was important to try and take advantage of the many opportunities where players could cooperate with one another. In Schelling’s own words “there is a mutual dependence as well as opposition”. One of the only cases where there is no cooperation is a situation in Game Theory referred to as the “Chicken Game” or a game of “pure conflict”.
During any conflict, communication is key. Usually, there is some kind of verbal or written communication. What happens, though, when this type of communication becomes impossible or improbable? Schelling believed the answer is in “tacit maneuvers”. Think of these maneuvers as action-based communication. He suggests this as a solution to the game of chicken who rips the steering wheel from the steering column and brandishes it so his opponent can see that he no longer controls the car.
So, if I want to avoid landing in my girlfriend’s doghouse, Schelling would suggest I first buy roses. I mean, let’s be real, once a year I can splurge on a nice bouquet. However, whenever I talk to my girlfriend, I make it clear that our spending limit is $50 for a Valentine’s Day gift. I would keep this commitment by only having $50 cash in my wallet before going shopping. (I could end up with a less expensive gift if my girlfriend was planning on spending more than $50, but my commitment to $50 solidifies her budget in return).
Schelling’s work focused on understanding the Cold War conflict. He wanted to understand the outcomes between nations in a world of nuclear bombs. His research was able to explain the methods behind the madness. The lessons learned not only provide insight into relations between nations, but also relationships on Valentine’s Day. Schelling’s work has helped thousands of couples enjoy their Valentine’s Day without conflict.