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Game Theory in Climate Change and a Proposed Solution

Source:

https://www.theguardian.com/science/blog/2016/apr/13/can-game-theory-help-solve-the-problem-of-climate-change

The article describes how game theory, a topic we discussed in class, can be implemented to solve world problems such as climate change, though it mentions some difficulties present in the situation that are not represented in game theory.

The basic idea of the situation of climate change is simple, as the article suggested. The earth can only absorb finite amounts of additional CO2 from man-made activities, primarily burning fossil fuels. Self-centred government, peoples, firms each want to emit as much CO2 as possible since it corresponds to wealth. Alas, there is a mismatch between individual (or groups of individuals) interests and the interest of the whole (i.e. the world). In this particular example, each individual is better off by burning more CO2 (hence a dominant strategy), yet if everyone does their dominant strategy of burning more CO2, the whole world is worse off.

The solution proposed by the article is by uniting these groups (i.e. countries), each with self-centred interests, into one large group (e.g. the Paris agreement), so that the interests of each group is aligned to one common interest of reducing CO2, supposedly making the world better and benefitting each individual group in the end. Note the term ‘supposedly’ in the previous sentence – the article demonstrates a caveat of the said approach in that the most polluting countries also tend to be the ones who are least affected by climate change. In fact, this is signified by the withdrawal of the US, one of the most polluting countries, from the Paris agreement. The reason may be simple: that the ‘benefit for all’ purported in such a union does not seem to be the case for the US.

Although the concept of game theory may indeed help out many real-life problems, it may only help to a certain extent, as demonstrated in this text. A further refinement of this theory, or the complement of a completely different idea, may be needed to solve some of the more complicated real-life problems.

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