The Decision to Reduce Emissions: A Game Theoretical Analysis By Seneth Waterman

Outline What is Global Warming? What is the significance of Global Warming? Game Theory Nash Equilibrium Prisoners Dilemma Tit-for-Tat Strategy Treaty Participation Game Where we are now: Paris Climate Talks

Green House Effect

Quick Facts US makes up 4% worlds population, produces 25% Carbon Dioxide Pollution U.S Source of Carbon Dioxide Pollution Coal Burning Plants: 2.5 billion tons annually Automobiles: 1.5 billions tons annually Last 50 years global temp increased at fastest rate ever in history Predictions: Trend will accelerate Expected 3 to 9 degree increase by end of century

Global Carbon Dioxide Level

Ramifications of Climate Change Higher Temperatures Changing Landscapes Wildlife at Risk Rising Sea Levels Increased Risk of Drought, Fire, Floods Stronger Storms More Heat-Related Illness and Disease Economic Loss Climate Change

Game Theory

Nash Equilibrium

Theorem 1 (Nash Existence): Every finite strategic-form game has a mixed-strategy Nash Equilibrium i. Finite number of players ii. Each player has finitely many pure strategies Mixed Strategy: Probability distribution that assigns to each action a probability of being selected

Nash Equilibrium Neither player has an incentive to change their strategy based on what the other player does

Prisoners Dilemma Both players will act in their best interest, preventing them from obtaining optimum outcome Results in worse condition than if they cooperated

Global Warming Prisoners Dilemma Prisoners Dilemma countries collectively better if they abate individually better if they pollute Social Optimum: Collective Payoff Maximized Carbon Leakage

Tit for Tat Game occurs multiple times Round 1: Player starts off cooperating Round 2: Player will do whatever the other player did in the previous round

Assisted Tit-for-Tat Strategy Tariffs imposed upon China in second round if China does not curb its emissions

Kyoto Protocol International Agreement in coordination with the United Nations Framework Convention on Climate Change Signers commit to binding emissions reductions Places heavier burden on developed countries as they are responsible to higher emissions currently and historically “Common but differentiated responsibilities.” Adopted December 11 th, 1997 Into effect February 16 th, Countries have signed United States has NOT participated

Treaty Participation Game Stage 1: All players simultaneously sign/don't sign. Stage 2: Signatories decide whether to collectively curb emissions or continue polluting. Stage 3: Non-signatories decide whether to curb emissions or continue polluting.

Treaty Participation Game

Where we are now: Paris Talks Paris Climate Talks Final week of negotiations

Work Cited "Global Warming Basics." What Is Global Warming. National Resource Defense Council, n.d. Web. 06 Dec "Global Climate Change: Effects." Climate Change: Vital Signs of the Planet. NASA, n.d. Web. 06 Dec "Climate Change Impacts & Threats." Climate Change Impacts & Threats. The Nature Conservancy, n.d. Web. 06 Dec Wood, Peter. "Climate Change and Game Theory." Applied Research in Environmental Economics (2005): n. pag. Web. Clemons, Eric, and Heinz Schimmelbusch. "The Environmental Prisoner's Dilemma." Dictionary of Statistics and Methodology (2005): n. pag. University of Pennsylvania. Web. Spaniel, William. "Game Theory 101." Game Theory Made Easy. N.p., n.d. Web.