Thinking about the problem of Climate Change
Nowadays, one of the hottest issue is how to solve the problem of Climate Change. I have read an interesting argument about Can Game Theory Help Solve the Problem of Climate Change.
The author assumes that “man-made climate change can be cast as an iterated game over a common-pool resource that no one owns and everyone has access to”. Since everyone is rational, they will be sure to know that “his share of the cost of the waste he discharges into the commons is less than the cost of purifying his wastes before releasing them”. Therefore, people selfishly select options (take advantage of the common-pool resource) that will yield the highest benefit, often to the detriment of the environment.
The author points out that the government, business, and people must cooperate together and everyone have to think globally but not locally in order to get the Nash Equilibrium, then solve the problem of Climate Change. However, the author still cannot figure out what the specific cooperation he mentioned is.
I find this is very interesting question for me. In Nash Equilibrium, we suppose that each player is rational and prone to choose his dominant strategy, which means nobody is forcing you to do the right thing. You are doing just what you want to do to optimize your own benefit. That is exactly what the author think about rational man “takes resources and money so the temptation to pollute is often too strong”.
According to the author, there are three main parts who take part in the game: the government, business, and ordinary beings. I draw a graph to show the power of this network. From the knowledge we obtain from class, there is no stable outcome between the three subjects. (An outcome is unstable if any pair of nodes connected by an edge have values that sum to less than 1.)
Suppose that there is a common-pool resource with value of 1. If people and government each get ½ then business won’t agree. But if people and business each get ½ then the government won’t agree. But as the author mentions, “People trying to free ride either get penalized or thrown out of the group.” “It has been shown that cooperation can be enhanced if people repeatedly play the same game with the same set of people.”
How to deal with this? The author suggest that everyone should have a global perspective, that is, “Thinking global while acting local recognizes that local interactions are important.” Try to find a power “administer such rules (i.e. punishing free riders) within the largely lawless landscape of international relations”. I think it is an intuitive way to break the unstable triangle. In my opinion we may let the NGO in. Contemporarily, NGO is a kind of power always takes part into the global issues. Thus, I draw a new graph to show the power of the network. Let’s suppose that people get the value of ¾, NGOs get the value of ¼, and each of government and business get ½. Thus, it is stable! Plus, in this example, people and NGOs are balanced, Governments and Businesses are balanced as well. We can try to use the game theory and power of network to solve the problem of the conflicts of resource, property, and development behind the climate change issue.
Let’s suppose the government can represent the justice and democracy. Especially for those highly developed authorities. Another thinking about solving this problem is, the government can provide permissions of resource using. Maybe use Second Price Auction method to the public, no matter to ordinary beings or business entrepreneurs. Thus, everyone is likely to bid at their true value for the common resource. Government can limit the resource-wasting phenomenon and pay its own value to protect the common-resource if no other bidders win the auction.