Game Theoretic Model of US Withdrawal from the Paris Agreement
In his paper titled Collective risk social dilemma and the consequences of the US withdrawal from international climate negotiations (see link below), Professor Oleg Smirnov from Stony Brook University explored the consequences of the United States withdrawing from the Paris Agreement through a game theoretic framework. The Paris Agreement was a landmark international agreement that set forth plans for each signatory nation to gradually reduce their emissions in order to try and avoid climate catastrophe. As a one of the most influential and polluting nations, United States participation in the agreement was thought to be essential for ensuring that all parties would cooperate. In June of 2017, President Trump withdrew the United States from the agreement.
Professor Smirnov tried to model this situation as a bargaining game to try and see if it was still possible for other nations to comply. We touched briefly on these kinds of games in class. There are two kinds of Nash equilibria here: one where all nations defect and disregard their agreements and one where all nations exactly fulfill their part and the climate crisis is just barely avoided. In either equilibria class, there is no incentive to defect and no incentive to contribute more. However, Professor Smirnov noted that there were an infinite number of equilibria in which the nations comply, corresponding to different ways of allocating the climate reduction burden.
Professor Smirnov introduced a different solution concept to make this game analyzable: a “fairness” equilibrium in which each nation attempts to make their strategy as close to a strategy which they see as fair. Professor Smirnov cited previous studies and agreements as a standard of fairness that nations would presumably see as fair. Since the United States exited the agreement, the United States’ climate burden must be distributed among the remaining nations. For this reallocation to be successful, each nation must see their new, increased burdens as fair.
Professor Smirnov’s analysis showed that the biggest obstacle towards an equilibrium is the cooperation of the large developing nations like China and India. A higher climate burden would affect these nations the most since the fastest ways to develop economically would also be harmful to the environment. developed nations were allowed to pollute during their development and not allowing developing nations to pollute as well could be seen as unfair.
The existence of the cooperating and defecting equilibria is an example of the suboptimal equilibria that we discussed in class. Even though all nations would be better off in the long term if each nation cooperated with the agreement and avoided climate catastrophe, game theory predicts that this is not the only likely situation. If many nations are defecting, then there is no incentive for other nations to cooperate as the remaining nations would be unable to cope with the climate problem. Climate change is possibly the greatest challenge of this century and we can all only hope that the world can create a fair and robust plan for addressing it.
https://795ad021-a-62cb3a1a-s-sites.googlegroups.com/site/olegsmirnov17/us_withdrawal_from_paris.pdf?attachauth=ANoY7cqTeLSQO9HnhYoxIymTvIU_eB8ZId9Pa0rwZ4nNOHid1wK1ulcCVYT3tlHktBilJnMArt_1yb1nJ_LjwHLwRa2rYZdnZT0AP31EiEwiidskDpTSvqU49RlfSfj6dGg6hUw0kwxW—JzrQVvhhsk9EsLynYo4iQpoor-bQTWgoPmI2GKYFGR6IOsHIIPcDqXH1XSrtxeIr3raRfOKgypgC1ZvN2kuZvj0p7c5tz1TrT6y-2V6Q%3D&attredirects=0