game theory and protecting the environment
Source: https://www.theatlantic.com/notes/2016/04/climate-change-game-theory-models/479340/
Our environment is quickly being destroyed. Without policies to mitigate CO2 emissions by each country, climate change can only get worse. This article goes into detail about the costs and benefits of countries deciding to create policies to help save the environment. This can be easily modeled by game theory as the payoff of one country depends on the decision they make with regards to CO2 emissions as well as the decisions other countries make. Because people are inherently selfish, game theory is set up so that players or in this case countries may be able to have a dominant strategy. Players are normally encouraged to always play their dominant strategy because it gives them the greatest payoff assuming that the other player will choose the strategy that is most beneficial for him/herself. In this situation, there are five main considerations that affect the total net payoff of creating policies to decrease pollution: “the value of environmental resources, the future costs of climate change, the degree to which emissions policies can affect those future costs, how much those policies cost, and how much each actor can actually afford to spend or lose (Newkirk II, The Atlantic).”
If climate change was analyzed in the short-term, pollution created by countries might pose little threat to the environment. Therefore, the dominant strategy for all countries would be to exploit the environment with low costs and high benefits. It would only make sense for countries to use environmental resources at maximum efficiency in order to maximize energy output and profits especially when competing with nearby countries for market power. Because countries have had the incentive to act in this way, the tragedy of the commons will eventually force countries to create emission policies. Once the ecosystem is almost depleted, the payoff for protecting the environment will increase considerably and the payoff for exploiting the environment will become zero. This is the only time when all countries will share the dominant strategy in protecting the environment as a whole. This is an example of the Stag Hunt Game where the highest payoff for both players is obtained if both players “decide to hunt the stag together” or in this case protect the environment. However, if only half of the countries decide to save the environment and the other half decide to exploit the environment; the first group of countries will have zero or negative net payoff and the second group will have positive payoff but not as much as they could, had both groups protected the environment. Although we still have some time before the environment completely collapses, countries would benefit from all deciding to protect the environment together now so that we do not have to wait right before it is too late.