What is the JVM thread scheduling algorithm?

There is no single Java Virtual Machine; JVM is a specification, and there are multiple implementations of it, including the OpenJDK version and the Sun version of it, among others. I don't know for certain, but I would guess that any reasonable JVM would simply use the underlying threading mechanism provided by the OS, which would imply POSIX Threads (pthreads) on UNIX (Mac OS X, Linux, etc.) and would imply WIN32 threads on Windows. Typically, those systems use a round-robin strategy by default.

It doesn't. The JVM uses operating system native threads, so the OS does the scheduling, not the JVM.