GEP Course Notes: Game Theoretic Approaches

Scott Barrett’s Environment and Statecraft heavily relies on game theory to make its arguments about environmental treaty-making. But what are the strengths and weaknesses of this approach?

Well, first it is important to note that Barrett has a lot of company with his approach. A nice article written in the Atlantic Monthly back in 1993, “Can Selfishness Save the Environment?”, explicitly considers how game theory was used then to discuss environmental cooperation. More recently, The Scientific American described Bruce Bueno de Mesquita’s use of Game Theory to predict the failure of the 2010 Copenhagen climate talks before they happened. And in 2011, some tried to use game theory to find ways pass the negotiating impasses at Durban: “Climate Change Solution Proposed by Scientists Incorporates Game Theory.”

In 2008, The Telegraph went so far as to say “Game theory could save the world.” That is nonsense, of course. Why? Well, while game theory does provide us with some useful tools for viewing strategic behavior (I’m not assigning Barrett without good reason!), it has a number of weaknesses as a basis for prescription, including:

  • It is only as good as its inputs, including assumptions about preferences which are rarely well understood
  • Some actors will choose to act ethically, rather than selfishly
    • However, that is not to say they are more likely to support solutions that also are in their self-interest!
  • There are a lot of limits to acting rationally… We’ll talk a bit more about this in class.
  • It is not really a theory. Rather, it is a set of analytical tools which require theoretical inputs.
  • All of which means that different analysts may come up with different predictions and prescriptions based on differences in their starting assumptions.