Global Climate Deal

This fresh news article of today was a mind-blowing one as I had a chance to see pretty much every aspect of Game Theory there: namely negotiation, fair division, distribution, Prisoner's dilemma, multiple players, efficiency, coalition and collective action.

As you all know, the delegates of the countries are trying to reach a global deal to reduce carbon emissions. According to some observers, there are two key players in these negotiations, developed countries and developing countries, i.e. rich and poor. According to some others, US and China are the key players. Denmark's involvement as a potential third player cannot be ignored due to the fact she is the host. From another perspective, there are hundreds of players (countries) or thousands of players (There are 15,000 people attending this conference!!) . There is also a regulator for this deal; namely United Nations.

In my opinion, it looks like China and the US will be the major key players though because they are the countries with the largest emissions and largest economical and political power.

Developing countries do not want to limit their peak emissions because they are still growing. Also, they claim that 60% of atmospheric space is occupied by 20% of most developed nations. So they think this is not fair. Developed countries, on the other hand, are afraid that their industries will be affected due to the new rules. They face strong objections locally in the industries that would be most affected. Also, they will be carrying most of the cost to support the developing countries so that developing countries can reach the targets by implementing new technologies.

This is an example of collective action multi-player Prisoner's Dilemma with prescriptive and predictive features. If everyone can agree, the total payoff for each player will be better because there is only one world. There is also only one atmosphere, and we cannot physically divide it. However, in the short-term some countries may financially be affected more. Further, short-term political pay-off structures impact the outcome.

In conclusion, by using the different expectations and payoffs of each country an efficient, balanced and fair deal is viable and has to be reached for the benefit of our next generations. However, due to the complexity of the game, it is very challenging to reach that deal.

http://www.cnn.com/2009/WORLD/europe/12/09/danish.draft.climate.text/index.html?iref=allsearch