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Can game theory save the UN climate talks?

Article: http://www.guardian.co.uk/environment/blog/2011/sep/06/game-theory-un-climate-talks

The above article discusses the difficulty that the UN is having in their talks about global climate change. Basically, the issue right now is that no country wants to spend money to make drastic changes in their CO2 emissions because no other countries are doing it. This is the game. Each country thinks, why should I do it if nobody else is doing it? However, every country would benefit if they each took steps toward climate change, and the more countries that did, the more each would benefit. John Heitzig, who is publishing a study in the National Academy of Sciences has come up with a way in which realizing this game could make global climate change move faster. He says that if other countries could punish the countries that pollute too much in a give time period, by also polluting too much in the next time period, that everyone would start polluting less. There are two problems with this. Besides the fact that this actually creates more pollution in the short run, it assumes that all countries will act rationally and all countries goal is to reduce pollution. Regardless, however, this is an interesting way to apply game theory to a global problem.

This game described above is much like the ones we have learned about in class. Our textbook lists three criteria for a situation to be considered a game. 1) There must be a set of participants called the players, 2) Each player must have a set of options of behavior called strategies, and 3) For each strategy each player receives a certain payoff that can depend on the strategies selected by everyone. By this definition, the global climate crisis and the solution suggested by Heitzig is certainly a game. In fact, this is much like the Prisoner’s Dilemma game. The Nash Equilibrium of this situation is for all the countries to keep polluting, however, if all countries reduced their pollution everyone would be better off.

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