Climate leadership by conditional commitments (original) (raw)
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Luring others into climate action: Coalition formation games with threshold and spillover effects
We explore the prospects of cooperation in a threshold public bad game. The coalition formation setup of the experiment allows us to investigate the issue of effort coordination between signatories and non-signatories to a climate agreement under the threat of an impending catastrophe. In the game, motivated actors may signal willingness to lead by committing a share of investments to a " clean " but less remunerative project. The game is parametrized such that the externality cannot be fully internalized by the coalition, so that some effort on the part of the second movers is required if the catastrophic losses are to be avoided. We manipulate both the relative returns of two investments and the extent to which the gains from leadership diffuse to second movers. We find that the likelihood of reaching a sizeable coalition of early investors in the clean technology is higher when the benefits are fully appropriated by the coalition. Conversely, spillovers can entice second movers to adopt the clean technology. Abstract We explore the prospects of cooperation in a threshold public bad experiment. The coalition
SSRN Electronic Journal, 2000
One may misread economic theory on climate policy to provide a warning against unilateral mitigation. While important lessons are drawn from 'global problems require global solutions', these say little about what to do in a phase before or without a global agreement-or with weak ones. In the literature on cooperation and leadership in provision of public goods, early provision may stimulate provision from others. A key to leadership is signaling; an early mover has private information and is motivated in part by knowing that others will follow. Others will follow if they understand that the early mover demonstrates that emission reductions are feasible and adoptable. Our analysis finds that early movers will be cognizant of what they need to demonstrate, and they will be concerned about and act on carbon leakage. Leadership can be deterred by concerns for free riding, but this is more likely for a country or coalition that is large in terms of emissions and face others who are both large and vulnerable to climate change. We suggest leadership is possible early in this century: numbers indicate that few-if any-need find themselves deterred from early action of some sort.
The Effect of Leadership in a Public Bad Experiment
Journal of Conflict Resolution, 2003
With regard to global or regional environmental problems, do countries that take unilateral actions inspire other countries to curtail emissions? In this paper this possibility is investigated by the use of a novel design of a laboratory public bad experiment with a leader.
Successful Leadership in Global Public Good Provision: Incorporating Behavioural Approaches
Environmental and Resource Economics, 2016
In the standard model of voluntary public good provision and other game theoretic models, climate-friendly leadership of a country is not successful: A unilateral increase of this country's greenhouse gas abatement measures, i.e., contributions to the global public good of climate protection, will not lead to a positive reaction by the other countries but instead trigger a reduction of their abatement efforts and thus a crowding-out effect. In this paper it is shown how this undesired consequence need no longer occur when elements of behavioral economics are incorporated in the otherwise standard model of public good provision. In particular, strategic complementarities between the public good contribution of the leading country and those of the follower may result either if the follower has specific non-egoistic or other-regarding preferences or if the leader's contribution positively affects the follower's beliefs, i.e., his conjectural variations, about the leader's behaviour. Keywords Climate protection • Voluntary public good provision • Other-regarding preferences • Conjectural variations JEL Classification C72 • D03 • H41 • H87 • Q54 Wolfgang Buchholz gratefully acknowledges financial support from the German Federal Ministry of Education and Research BMBF through the research projects RECAP 15 (FKZ 01LA1139A) and ECCUITY (FKZ 01LA1104B). Todd Sandler received support from the Vibhooti Shukla endowment at the University of Texas at Dallas. Lisa Dippl, Michael Eichenseer and Dirk Rübbelke have given helpful comments on previous versions of this paper. We gratefully acknowledge the comments and suggestions of two referees that helped improve the paper.
We show experimentally that public goods are provided more e¢ ciently via the voluntary contribution mechanism (VCM) if players can divide their contributions into two stages. Our …ndings address the role of leadership in social dilemmas. Do leaders provide a "good example "? And how do they a¤ect the behavior of potential followers? We …nd that Stage 1 contributions in the sequential two-stage VCM show signi…cant leadership e¤ect. At the same time, the followers'Stage 2 contributions represent a negligible share of the e¢ ciency gain. We conclude that an e¢ cient sequencing of contributions in the VCM has to be targeted towards creating leadership incentives, and that leadership should be inclusive rather than exclusive. JEL Classi…cation: C72; C91
2020
Evidence from public goods game experiments holds the promise of informing climate change policies. To fulfill this promise, such evidence needs to demonstrate generalizability to this specific policy context. This paper examines whether and under which conditions behavior in public goods games generalizes to decisions about voluntary climate actions. We observe each participant in two different decision tasks: a real giving task in which contributions are used to directly reduce CO2 emissions and an abstract public goods game. Through treatment variations in this within-subjects design, we explore two factors that are candidates for affecting generalizability: the structural resemblance of contribution incentives between the tasks and the role of the subject pool, students and non-students. Our findings suggest that cooperation in public goods games is only weakly linked to voluntary climate actions and not in a uniform way. For a standard set of parameters, behavior in both tasks ...
A bargaining experiment on heterogeneity and side deals in climate negotiations
The recent global climate change agreement in Paris leaves a wide gap between pledged and requisite emissions reductions in keeping with the commonly accepted 2 °C target. A recent strand of theoretical and experimental evidence establishes pessimistic predictions concerning the ability of comprehensive global environmental agreements to improve upon the business-as-usual trajectory. We introduce an economic experiment focusing on the dynamics of the negotiation process by observing subjects' behavior in a Nash bargaining game. Throughout repeated rounds, heterogeneous players bargain over the allocation of a fixed amount of profit-generating emissions with significant losses attached to prolonged failure to reach agreement. We find that the existence of side agreements that constrain individual demands among a subset of like countries does not ensure success; however, such side agreements reduce the demands of high-emission parties. Our results highlight the importance of strong signals among high emitters in reaching agreement to shoulder a collective emission reduction target.
Cooperation studies of catastrophe avoidance: implications for climate negotiations
Climatic Change, 2016
The landmark agreement recently negotiated in Paris represents an ambitious plan to combat climate change. Nevertheless, countries' current climate pledges are insufficient to achieve the agreement's goal of keeping global mean temperature rise "well below" 2 • C. It is apparent that climate negotiators need to be equipped with additional strategies for fostering cooperation if a climate catastrophe is to be averted. We review the results arising from an emerging literature in which the problem of avoiding dangerous climate change has been simulated using cooperation experiments in which individuals play a game requiring collective action to avert a catastrophe. This literature has uncovered five key variables that influence the likelihood of avoiding disaster: (1) the perceived risk of collective failure, (2) inequalities in historical responsibility, wealth, and risk exposure, (3) uncertainty surrounding the threshold for catastrophe, (4) intergenerational discounting, and (5) the prospect of reward or punishment based on reputation. Along with the results of a recent experimental assessment of the key instruments of the Paris Agreement, we consider how knowledge of the effects of these variables might be harnessed by climate negotiators to improve the prospects of reaching a solution to global climate change.
Incentive Compatible Climate Change Mitigation: Moving Beyond the Pledge and Review Model
William and Mary Environmental Law and Policy Review, 2018
Climate change represents a global commons problem, where individuals, businesses, and nation-states all lack sufficient incentives to reduce their greenhouse gas emissions to levels consistent with meeting their collectively agreed upon mitigation goals. The current “pledge and review” paradigm for global climate change mitigation, which many see as a major breakthrough, relies primarily on moral pressure, reputational incentives, and global public opinion to foster cooperation on mitigation efforts over and above those driven by maximization of narrow conceptions of national interests. Given the scale of the emissions reductions required to meet stated mitigation goals, the substantial economic costs of deep decarbonization, and the central role of fossil fuels in the global economy, these soft factors are likely to prove too weak. Projections based on the pledges embodied in the Paris Agreement indicate that the world is not on a path to avoiding dangerous anthropogenic interfere...
Journal of Environmental Economics and Policy, 2018
The theory of cooperative n-person games offers a rigorous approach for analysing multilateral real-world agreements, but its practical application is hindered by the exacting data requirements demanded by the fully specified theoretical models. In this article, we demonstrate how the formal analytic can be made more amenable to application. We utilize our approach to model international climate negotiations as an n-person cooperative game, the solution of which allocates carbon reductions across the grand coalition of nations. Using a simplified game to represent the carbon reduction allocation problem, we obtain theoretical solutions using a game-theoretic concept known as the proportional nucleolus. The solution to the game allows us to ideally determine countries' relative percentage carbon reductions. These theoretical results are compared against actual commitments established in the Paris Agreement of 2015. The paper discusses the implications of the game-theoretic results, including the significant under-commitment of nations such as the United States. More generally, the approach developed herein provides an illustration of how rigorous game-theoretic methods can be adapted to the practical considerations of policy analysis.