The integration game

Despite studies indicating an increasing preference for integrated housing and legal measures against housing discrimination, housing segregation persists in American society. This Article addresses this seeming paradox by challenging Thomas Schelling's classic tipping model as overly simplistic, and advancing in its stead a three-game model of homeowner preferences. After characterizing the interplay of incentives that distorts homeowner choices in resegregating neighborhoods, the Article draws on techniques that have been developed to neutralize distortionary incentives in the stock market to propose four measures for combatting market incentives leading to resegregation: home-equity insurance, realty sales taxes, institutional subsidies, and growth controls. While these techniques will not completely arrest resegregation, they will enable nonbiased homeowners to achieve their goal of racially integrated housing. In addition to increasing integration, these techniques should create a separating equilibrium in which only racially biased individuals would choose to leave racially changing neighborhoods, thereby revealing their true colors.