Re: Schelling Points leads to interesting family investment opportunities

[tcmay@got.net (Timothy C. May)]

At 12:41 PM 7/28/96, Ian Grigg wrote:
>Hi Tim,
>
>you said:
>> The _costs_ of extending beyond the Schelling point boundaries
>> is deemed to be too high, and the boundary persists.
>
>This reminds me of the transactional theory of business units.
>Working from memory, the optimal size of a business unit is
>positively related to the cost of the transactions conducted
>between units, other things being held constant.
>
>Thus, in a place where it is "expensive to do business" the
>dominant form of company will be large.  Conversely in a
>cheap business environment, small companies will predominate.
>This notion spurs one to examine the transactional costs and
>to decide (or not) to lower them...

Yes, I think these things are deeply intertwined. Coase's work on the
nature of corporations, for example. (Another connection is that economics
and markets are largely about "signalling mechanisms," and it can be argued
that prices are variants of Schelling points, albeit hopping around as
other market players jockey for advantage.)

>The interesting part for your family context is that falling
>transaction costs have purportedly produced a shift away from
>large companies to smaller units.  Those falling costs are in
>the sphere of digital communications, other technology, and
>regulation.  If such were to apply to the context of families,
>upbringing children and education in general, one might
>predict that the size of the family should shrink.

Which it has, as you note. The availability of microwave dinners,
transportation to new jobs, new employment patterns, and other factors too
numerable to mention are correlated fairly strongly with a reduction in the
size of the average family.


>One would then be lead to ask, if you are proposing that
>Internet technologies in general and crypto in particular
>are influences on the Schelling points related to the family
>rights set, can this result in smaller family units?

I wouldn't go quite  _this_ far! (And it's hard to go too much further than
we have already...as you noted, increasing numbers of Westerners are
single.)

Certainly your comments are generally relevant and interesting, and
sociologists should have fun examining the economic, game-theoretic,
psychological, and other factors that are interlinked.

--Tim May

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