In order to explain the emergence of segregation, Economics Nobel Prize winner Thomas Schelling proposed a very simple and elegant agent-based model where two types of agents are placed on a grid. Each agent is aware of its neighboring agents and is content with her current position if at least a \(\tau\) fraction of neighboring agents is of her type, for some \(0\leq \tau \leq 1\). If this condition is not met, then the agent becomes discontent with her current position and exchanges positions with a randomly chosen discontent agent of the other type or jumps to a randomly chosen empty spot. Schelling showed with simple experiments that even with \(\tau \leq \frac{1}{2}\), i.e., with tolerant agents, the society of agents will eventually segregate into almost homogeneous communities.
This surprising observation caught the attention of many researchers who studied various models and verified Schelling's predictions experimentally. However, all these models are essentially random processes where discontent agents choose their new location at random. To address this drawback, we have introduced a game-theoretic version, where agents choose their location strategically.
