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Prisoner’s Dilemma and Global Warming

Prisoner’s dilemma is a game in game theory, where two individuals are put in a situation where it is in both individuals’ best interests to cooperate, but find it expensive to coordinate, leading to a non-perfect outcome for both.

Global Climate Change has been put on the agenda for decades, with a large amount of scientific data to backup. The players are countries around the world. According to the prisoner’s dilemma, if every country decides to corporate and actually starts to tackle the issues seriously, everyone would benefit in the long run. However, the potential collective consequences they can face as a result of not cooperating to act upon the issues still do not provide enough incentives for them to clean up. Let’s see why.

A major underlying cost, which make coordinating to clean up expensive, involves an unequal distribution of benefits and costs each country has to bear with. When not every country will bear the same costs and benefits if everyone decides to be collectively environmentally friendly, smaller countries who don’t contribute much to the total emission would not have enough incentive to change their emission behaviors as they think their actions would not contribute anything to the total emission reduction. Large countries like U.S.A., Russia and China will have to bear high short-term costs like a stagnant GDP to perform a long-term clean up, while not knowing for sure whether the other will make the same decision; this leads to them not acting upon the issues seriously (betraying the other countries offer a greater (short-term) rewards than cooperating with them).

This example can be illustrated through the diagram above. Take two countries as samples of countries around the words and assume that being environmentally friendly is like remaining silent (better cooperative choice) and doing nothing or emitting more CO2 is like betraying (worse cooperative choice. If countries remain silent, they are likely to face a short term lower GDP, but will achieve a long term environmental (thus, economical) sustainability, which is the most ideal case. However, both (rational self-interested) countries would rather betray each other by doing nothing or omitting more to reap the short term rewards. As a result, both end up betraying each other and face the worst combinations possible, which is an inevitable global warming in the long run.

In reality, decisions-making regarding global warming issues is much more complex, due to the high number of players and imperfect information. But in the end, it is an important issue that needs to be collectively addressed.

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