Climate change and game theory

Abstract

This paper examines the problem of achieving global cooperation to reduce greenhouse gas emissions. Contributions to this problem are reviewed from noncooperative game theory, cooperative game theory, and implementation theory. We examine the solutions to games where players have a continuous choice about how much to pollute, as well as games where players make decisions about treaty participation. The implications of linking cooperation on climate change with cooperation on other issues, such as trade, are also examined. Cooperative and noncooperative approaches to coalition formation are investigated in order to examine the behavior of coalitions cooperating on climate change. One way to achieve cooperation is to design a game, known as a mechanism, whose equilibrium corresponds to an optimal outcome. This paper examines some mechanisms that are based on conditional commitments, and their policy implications. These mechanisms could make cooperation on climate change mitigation more likely.