Why We Need to Change the Game

Feb 1, 2021 —

The U.S. contributes about 10% of worldwide greenhouse gas emissions. So we need strong global cooperation. That’s the key. But there’s been little progress since the first UN conference in 1992. The Paris Agreement is completely voluntary and was deliberately based on self-interest according to its godmother, Christiana Figueres.

Climate is a public-goods game

A safe climate is a public good — anyone who contributes to it receives only a fraction of the benefit which is spread fairly evenly across the world. Social scientists have conducted well over 1,000 experiments in which people play variations of the standard public-goods game. It works like this. Each player contributes, say, $0 to $10 to the common pot. That money is doubled (meaning the climate benefit is twice the cost of abatement), and then distributed evenly to every player.

If nine players contribute $10, and one contributes nothing, the $90 is doubled and the $180 is divided evenly. The cooperative players are $8 better off, but the defector gets $18 without contributing a thing. Better to defect. In the experiments, players start off semi-cooperatively, contributing about $5 each. But some contribute little, the others feel cheated, and after playing the game about 10 times, the average contribution falls to about $1. This is the fate of climate agreements — because they are voluntary, and there is no global government to enforce them.

Change the Game

The preface to our book, Global Carbon Pricing (MIT, 2017, $35, or free PDF) describes a slightly different climate game, call it the “Preface Game:”

Consider the “common commitment” game, in which the rule is that the referee interprets a pledge of $x to mean a player will contribute up to $x, but only as much as the lowest pledge.

The change seems perverse. Players can contribute as little as they want; $0 is allowed. But even if they pledge $10, the referee will prevent them from contributing any more than the lowest pledge. If the lowest is $1, then all are forced to contribute only $1.

The result is that everyone contributes $10 on every turn.

That’s right. Changing the rules turns all those cut-throats into angels, and we get perfect cooperation. This game is not practical, but it does show that when players behave badly, it may be the fault of the rules of the game, not the players.

All right, … so why does this particular rule-change work? Here’s how each player thinks. Suppose all the other players are generous and pledge $5 to $10. Can do better by cheating and pledge nothing? No, then the referee will restrict all contributions to zero and I get nothing. Contributing less than $5 only hurts me.

But what if the others are all stingy and pledge only $1 and I pledge $10, would I be a sucker. No, the referee will hold my actual contribution down to $1, so I’ll make the same small amount as the others, and that’s the best I could do. So pledging too much can’t hurt me, and pledging too little can hurt me. So I should pledge $10. With everyone thinking this way, they all pledge and contribute $10.

Searching for a new climate game

The point of the Preface Game is to show that changing the rules can change the behavior of the players from cut-throat to angelic. This is a highly optimistic result, but the simple game used to show it is not practical. No one could enforce such a rule, and it would be unwise to do so with so many countries in the game, some of which might even secretly oppose climate action.

So we need to find a new game. One possibility is to agree that cooperative countries can punish non-cooperators, perhaps with trade tariffs. So far, this has proved extremely unpopular, and in experiments, it sometimes leads to destructive retaliation.

So we should first look for a voluntary game. But experiments on the standard public goods game show that something more is needed to prevent a downward spiral of ambition. The Preface Game has this “something more.” So what is needed is a purely voluntary version of the Preface Game.

The next post begins the search for that game.