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Sustainability with Game Theory

With a new study from scientists at Michigan State University, there may be a possibility to incorporate game theory into UN sustainability talks (article here).  The idea is that the current model of motivating countries to adopt sustainability plans and meet environmental goals does not really work and it only makes the countries not want to put in effort and money for new sustainability projects.  This is because any effort by only one country will not be enough to affect the global environment issue.  So, from a single country’s perspective, it would be a great loss if it chose to spend money on say, carbon emission reductions, while other countries didn’t cooperate because it would have spent a lot of money for little impacting effort.  However, if other countries chose to spend money for carbon emission reductions, then the single country that didn’t would have gotten a free ride into global clean air without spending any money.  So from this standpoint, it is in the best interest of individual countries to not spend any money on emission reductions.  This is related to the Prisoner’s Dilemma with many players and a pure Nash equilibrium of zero sustainability efforts.

To alleviate this problem, a new model proposed by the scientists incorporates linear compensation.  In this model, countries have an incentive for putting in sustainability effort.  If the single country does not put in effort while other countries do, then it gets a punishment relative to the amount of effort put in by the other countries.  If the country does put in effort while others don’t, then the other countries gets punished relative to the amount of effort put in by the single country.  If no country put in substantial effort, then all countries do not get punished.  In this case, it is in the countries self-interest to try and put in effort for sustainability measures.  This model will hopefully get all the countries to cooperate and save the global environment.

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