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The take-home message from Schelling’s story—that incentives sometimes backfire—is familiar to psychologists.
Jessica C. Flack • Worlds Hidden in Plain Sight: The Evolving Idea of Complexity at the Santa Fe Institute, 1984–2019 (Compass)
The Compleat Strategyst: Being a Primer on the Theory of Games of Strategy (Dover Books on Mathematics)
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Thomas Schelling in his wonderful essay “The Life You Save May Be Your Own.”
Richard H. Thaler • Misbehaving: The Making of Behavioral Economics
Professor Howard Raiffa’s maximum bid of others (or MBOO, pronounced “maboo”) analysis, which captures the fundamental trade-off in graphical form.
Guhan Subramanian • Dealmaking: The New Strategy of Negotiauctions (Second Edition)
Hidden Games: The Surprising Power of Game Theory to Explain Irrational Human Behaviour
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Game theory can explain these outcomes. While the best outcome for everyone would be to cool the spiral, for any individual actor in the game the personal best outcome is to demand a price rise as the environment allows them to make this demand, and this leaves everyone worse off in the end.