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Game Theory in Climate Change

Climate change has been a concern for the world population for years, as the increasing emerge of extreme weathers seemed to confirm the upcoming calamity of the Earth. The Earth’s finite capacity to absorb additional CO2 produced by burning fossil fuels is approaching to its destination, yet the self-centered motivations of governments, businesses, and people lead them to try and use as much of this capacity as possible. Despite the relative success of the Paris COP21 as the last year press release suggested, the human beings are still far from effectively controlling greenhouse gas emissions. Scientists and sociologists have been working hard to solve this stalemate and now they turned to game theory to potential solutions.

Most of the institutions are selfish. Increasing CO2 production actually corresponds to the higher wealth generated, and thus what is best for the individual is not best for the group. This results into a quandary just as in the prisoner’s dilemma mentioned in class. Suppose only two institutions are involved in this situation. Their economics will be slightly slowed down as they start taking effort to limit CO2 emission, yet if they do not take any effort in environmental protection, they will not be worse off while the other institution will be much worse (see the chart below, the numbers are random, just to show the difference in degrees of consequences).
dilemma-chart

Unfortunately, the dominant strategy for both instructions are to put no effort in CO2 emission elimination, and to generalize this result into a larger context, the Earth, no one will want to participate in the climate protection if they only consider the short-term economic results.

Therefore, economists and sociologists might want to turn to game theory to look for potential possibility to encourage government and institutions to participate in environmental protection. The news indicated that there is a theory casting man-made climate change into an iterated game a common-pool resource that no one owns and everyone has access to. Yet there are a lot more complications in this game. For example, those that have the greatest impacts on the climate – the most industrialized nations – are those nations that will be least affected. It’s some of the poorest people living in some of the least developed nations that are going to bear the brunt of climate change.

Link:

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

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