Micromotives And Macrobehavior

Micromotive is the inner motivation that leads us in performing particular acts. Those decisions are to pursue peoples' own self interest, unintentionally lead to contradict with other people's acts. Chasing that idea of human nature T. Shelling gives us variable results of how micromotives can guide the society in the world of externalities. Economists tend to rely on A. Smith's "Wealth of nation" where he talks about invisible hand theorem" according to which people seek to promote their own self interests in the society and also promote the interest of society. (McConnel, B.). Schelling in his paper presents things from different angle. He convinces us that individual actions can lead to surprising results as an aggregate.

In our society people selfishly follow their own interests not considering the results those may have on others: either positive or negative. For instance Wright Brothers have invented the first airplane. That is a great example of positive spillover. Inventers chase their own interest on the first place, but in the long term they have contributed into societal progress. Therefore now we can get to the destination faster and easier. An example of negative externality is someone who refuses to pay the taxes to the government. To save money acts on his own interest behalf, when at the same time his action doesn't benefit societal "bank". That behavior could decrease future potentials for societal development if left ungoverned.

Shelling introduces coordination as an important aspect of well functioning society. Author considers two kinds of coordination: social contract and government intervention. One meaning is seen in situations like choosing whether to drive on the left or the right lanes. The drivers must coordinate to each other's behavior, so accidents will be avoided. Many times we have been challenged by those situations where you want to behave just like everyone else or not behaving just like everyone else. Invisible coordinating laws influence our decisions and behavior in those situations. For example at the funeral everyone is trying to wear dark colors rather then bright and flashy.

Government is taking part in coordinating our behavior by establishing rules and regulations. For example you are not allowed to drive above speed limit otherwise a state trooper may pull you over.

Schelling believes that segregation results from different micromotives that people may have because of different ethnicities, skin color or religion. He observed the phenomenon of diversity between people those qualities that choose to live in the same neighborhoods. That supports the idea of social contract where people of the same background have the same micromotives that help to interact with each other in harmony. He believes that racism is not the main factor of segregation in the neighborhoods. Based on "micromotives" theory broad diversity of viewpoints among individuals leads them to ling and interact more often with those who hold similar opinions. Black people are likely to buy or rent an apartment in a similar ethnic neighborhood because