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Strategic reasoning and bargaining in catastrophic climate change games

Abstract

Two decades of international negotiations show that agreeing on emission levels for climate change mitigation is a hard challenge. However, if early warning signals were to show an upcoming tipping point with catastrophic damage1,2,3,4,5,6,7, theory and experiments suggest this could simplify collective action to reduce greenhouse gas emissions8,9,10,11. At the actual threshold, no country would have a free-ride incentive to increase emissions over the tipping point, but it remains for countries to negotiate their emission levels to reach these agreements. We model agents bargaining for emission levels using strategic reasoning12,13 to predict emission bids by others and ask how this affects the possibility of reaching agreements that avoid catastrophic damage. It is known that policy elites often use a higher degree of strategic reasoning13,14, and in our model this increases the risk for climate catastrophe. Moreover, some forms of higher strategic reasoning make agreements to reduce greenhouse gases unstable. We use empirically informed levels of strategic reasoning when simulating the model.

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Figure 1: Different levels of strategic reasoning lead to different bids for emission levels.
Figure 2: The overall effect of strategic reasoning on bargaining outcomes when varying the number of players n and levels of strategic reasoning L1, L2 and L3.

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Acknowledgements

V.V., D.J.A.J. and K.L. want to thank the Swedish Energy Agency and the EU-FP7 project Mathemacs for financial support. We thank R. Smead, R.L. Sandler, P. Forber and J. Basl for providing detailed information about their Figure 1 starting values to facilitate comparison.

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V.V. designed, performed the research and wrote the paper with contributions from D.J.A.J. and K.L.

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Correspondence to Vilhelm Verendel.

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The authors declare no competing financial interests.

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Verendel, V., Johansson, D. & Lindgren, K. Strategic reasoning and bargaining in catastrophic climate change games. Nature Clim Change 6, 265–268 (2016). https://doi.org/10.1038/nclimate2849

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