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Game Theory in UN Negotiations

Game Theory in its essence is the mathematics behind rational decision- making. It attempts to simplify the herculean task of determining human behavior and decision making using probability and statistical tools. It is important to apply Game Theory in business negotiations such as the examples of Apple, Samsung and Google that we studied in class, or between firms such as Walmart, Target and Wegmans when it comes to decisions being made on pricing in the retail industry. However, to extend the scope of Game Theory to beyond the traditional sense into the world of diplomacy is a novel attempt being made by some Scottish, Dutch and German economists. They are trying to determine the outcomes of the Paris Negotiations in the UN Conference on Climate Change.

 

By anticipating the bargaining positions of all main actors and blocs ranging from the United States and European Union to the Alliance of Small Island States (AOSIS), they are scanning all available UN submissions and conversations with negotiators to award a value for each “actor”. Runing actors values through a series of game theoretic models produces a series of predictions for what observers can expect from the negotiations. Other factors are also being accounted for such as how flexible will a country be for the inclusion of a certain clause in the final pact? Or how much clout does it exert over other countries, thus impacting negotiations?

 

Such a method has been employed by the in the past and researchers had correctly predicted the outcome of the UN climate talk before, with astounding accuracy. In 2009, two team of economists correctly predicted the unfortunate outcome of the Copenhagen summit in which there was no legally binding international agreement being made. This can be linked to what we studied in class since just as in the Hawk/Dove game each country comes with a pre-planned development agenda where they want to use up fossil fuels but at the same time they want to battle climate change. So the international legislation must go in their favor without affecting their progress. So each decision needs to be made according to the decisions of trading partners, rival countries and each country wants to make sure that they can get the best deal. This inter-dependency in climate change negotiations is just like the games we study with multiple outcomes depending on the opponents reactions.
Thus, the results of the Paris Summit are being predicted using Game Theoretical Models.

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