The Naval Podcast – Schelling Point: Cooperating Without Communicating

Check out Naval’s Episode Page & Show Notes

This podcast clip is part of a conversation between Naval Ravikant and Babak Nivi. Unless otherwise noted, quotes are from Naval. For reference, check out Naval’s famous How to Get Rich tweet storm.

Key Takeaways

  • The Schelling point is a game theory concept made famous by Thomas Schelling in his book, The Strategy of Conflict (which Naval recommends)
    • It addresses the question – How do you get people who cannot communicate with each other to coordinate?
    • For example – if two Americans wanted to meet, but could not communicate any more information, they’d utilize social norms to converge onto a Schelling Point
      • So perhaps the best chance for the meeting would be at midnight on New Years in New York City, somewhere like Grand Central or the Empire State Building
  • A simple example:
    • Imagine two companies are competing heavily with each other
    • Let’s say the price fluctuates between $8 and $12 for whatever the service they offer is – don’t be surprised if they converge to $10 without ever talking to each other