Elephant Poaching Explained by Game Theory
Elephant poaching has been a longstanding issue, but possible solutions have been sparse. However, it is planned to have a domestic ivory trade ban in China by the end of 2017. There has been much speculation about whether this ban would actually have much effect at all on underground trade, and the author of the article investigates this.
Since there is a general lack of data regarding illegal ivory trade, the author used game theory, to help determine how different policies could affect elephant poaching. He looked at the effect on speculators depending on if the ban was indefinite or temporary. The article examines two types of speculators: wholesale, syndicates with a large amount of stock, and private speculators, individuals with a small amount of stock. He came to the conclusion that an indefinite ban would be best, at least for preventing poaching and that private speculators would benefit more from this policy.
Game theory, as we discussed in lecture, can be used to clearly model issues like this one. The Chinese government needed to consider the effect the policy would have on speculators, and speculators would need to understand the implications of the policy to determine how much product they should move, so game theory was a succinct way to examine the gains and losses of these two non-cooperative parties.
A represents speculators, and B represents regulators. Image by Ross Harvey