Peoples Own Self Interest example essay topic

Micro motive 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 micro motives 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. (Mcconnell, 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. In venters 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 micro motives that people may have because of different, 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 micro motives 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 "micro motives" 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 they will be able to fit in with that environment better. According to A. Smith people tend to pursue their own interest at the same time they maximize utility for the society. That theory contradicts with what Schelling is trying to say in his paper "Micro motives and Macro behavior". Both theories start the same but the outcomes are different.

According to Smith society is intentionally benefited from one's following his self interest. Schelling states that it is possible that the outcome of such selfish activities could be negative and even harmful for society. In his paper he gives a variety of examples to support his point of view. It seems to me that both of those authors are right in their views, Schelling just develops the "invisible hand" theorem to a different extent. He says: "People do things, or abstain from doing things, that affects others, beneficially or adversely". Reading Schelling article I felt that it was a wonderful complement to two curses I participated in: Micro theory and Microeconomics for managers.

It was a great addition to class material, which enhanced and added more colors to my experience. I was able to recognize prisoners dilemma game which is similar to Shelling approach where a person is following his self interest and you don't get socially desirable results. Also coordination game came to my mind. There it allows people to follow self interest, then collective result is desirable.

Idea is that theory works if you get a mechanism right. (R. Wallace). As for my part I was introduced to a different perspective of the mechanism that governs peoples behavior and decision making process. With a variety of examples and accessible language Schelling presented how important micro motives could be while making decisions in everyday life. Author brings attention to those aspects of our everyday choices and outcomes that I would never think of. Shelling's article just helped me to better connect two of those classes mentioned above and gave me a better and wide understanding of the material.