Would you rather live is a neighborhood where everyone shares your skin colour?
Most people would say that they are not racist and would prefer to live in a mixed neighborhood. If this is the case then why are most neighborhoods segregated?
Thomas Schelling analyzed this problem using game theory and showed that even if people are not racist you can still end up with segregated neighborhoods.
We will assume that everyone is happy in a mixed neighborhood but doesn’t want to be in an area where they are in a small minority. (To simplify things we will assume that people are either black or white, obviously this isn’t the case but it makes things easier to explain)...
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