Nash equilibrium and climate change
https://medium.com/nori-carbon-removal/how-to-break-the-climate-change-nash-equilibrium-f4ca3354cb8b
Climate change has been an increasing concern for the last few years as global temperatures, CO2 emissions and pollution continue to rise. However, there has been little reform due to the fact that one country or one area reducing their carbon footprint is not a dominant strategy and does not encourage other countries to follow and do the same. Without any direct incentive, other than bettering the planet and our future, no one would choose using a greener strategy in a payoff matrix because it will make them worse off. In this matrix no one person or country carse to make a difference because it is usually an inconvenience, such as taking a bus over driving one’s own car, and they will not see the direct results. Or, if there were results seen from one place reducing their carbon footprint it still benefits others who are not acting environmentally conscious.
Nash equilibrium does not guarantee a collectively beneficial decision. For example, in the prisoner’s dilemma, it would be rational for each prisoner to not confess. However a collective bemnifical decision will always be both prisoners confessing because neither prisoner has the opportunity to change their answer without becoming worse off. With climate change in theory everyone should reduce their carbon footprint, however each individual country betters by changing their decision and sticking to their old ways. Therefore a Nash equilibrium for this matrix is when both countries decide to not care about carbon emissions. This is an example of getting trapped in the Nash equilibrium because it is impossible for either “player” or country to change their decision without making themselves worse off since the benefits of reducing carbon footprint are not immediate.
The solution brought forward to fix this issue of no one wanting to make themselves worse off is to add financial compensation for reducing CO2 emissions. Theoretically this would make sense since it would encourage people to not choose the “easy” or “cheaper” way in order to get compensation and become better off.