Carsten Vogt

Cooperation in International Environmental Negotiations Due to a Preference for Equity

This paper demonstrates that cooperation in international environmental negotiations can be explained by preferences for equity. Within a N-country prisoners dilemma in which agents can either cooperate or defect, in addition to the standard non-cooperative equilibrium, cooperation of a large fraction or even of all countries can establish a Nash equilibrium. In an emission game, however, where countries can choose their abatement level continuously, equity preferences cannot improve upon the standard inefficient Nash-equilibrium. Finally, in a two stage game on coalition formation, the presence of equity-interested countries increases the coalition size and leads to efficiency gains. Here, even a stable agreement with full cooperation can be reached.

On the Importance of Equity in International Climate Policy: An Empirical Analysis

Based on unique data from a world-wide survey of agents involved in international climate policy, this paper empirically analyzes the importance of equity in this field. We find that equity issues are considered highly important in international climate negotiations and that the polluter-pays rule and the accompanying poor losers rule are the most widely accepted equity principles. Our econometric analysis shows a strong influence of the economic or emission performance of the agents? country on the importance of equity issues and principles: (i) Equity issues are seen as more important by individuals from G77/China countries or from countries with less current per capita GDP and less future per capita CO2 emissions. (ii) Agents from richer countries are less in favor of incorporating the polluter-pays and the ability-to-pay principle in future international climate agreements. (iii) The poor losers rule is more strongly supported by individuals from G77/China countries or by individuals from countries with less current per capita GDP. While these results are consistent with pure economic self-interest, the support for the egalitarian principle runs contrary to economic intuition: In the long-run, agents from richer countries are more in favor of incorporating the egalitarian principle. Furthermore, the effect of the economic performance variables on the desired degree of incorporating the polluter-pays principle interestingly becomes less significant in the long-run. This indicates that future international climate agreements could possibly be based on a combination of the polluter-pays, the egalitarian, and the poor losers rule.

Dismantling of a Breakthrough: The Kyoto Protocol - Just Symbolic Policy!

We show that U.S. withdrawal from the Kyoto Protocol is straightforward under political economy considerations. The reason is that U.S. compliance costs exceed low willingness to pay for dealing with global warming in the U.S. The withdrawal had a crucial impact on the concretion of the Protocol prior to its likely ratification at the end of 2002. Remaining non-EU Parties to the Kyoto Protocol gained veto bargaining power and, thus, were successful in asserting far reaching concessions from the EU on sink credits and tradability of emission rights. Taking these concessions into account, the Kyoto Protocol was essentially reduced to a symbolic treaty that codifies more or less business-as-usual emissions and makes compliance a rather cheap deal.

An experiment on sequential rent-seeking

In an experiment on sequential rent seeking, we find that the theoretically predicted first-mover advantage does not exist empirically. Rather, a second-mover advantage can be observed. Though the subgame perfect equilibrium can not prevail in experiment, individual behavior is highly reasonable nevertheless, such that subjects appear to play a reduced form of the original game. We also observe that the efficient fair outcome can not be achieved because of the exploitation opportunity for the second mover. The observed behavior is quite different from that in ultimatum and trust game experiments. Keyword(s): Rent-seeking, Experiment, Reciprocity, Fairness, Exploitation

Efficient Rent-Seeking in Experiment

In a series of experiments we show that people learn to playthe efficient outcome in an open-ended rent-seeking game. Thisresult persists despite quite different experimentenvironments and designs, like different propensities ofcompetition, group sizes etc., and is interpretable as aresolution of the so-called Tullock paradox which states thatreal-world rent-seeking expenditures are much lower than whatthe standard rent-seeking model predicts.

On the Self-Serving Use of Equity Principles in International Climate Negotiations

This paper puts forward equity as an important structural element to understanding negotiation outcomes. We first advance bargaining theory to incorporate the self-serving use of equity. Agents are predicted to push equity principles which benefit them more than other parties, in particular those which are disadvantageous to parties with large bargaining power. Based on unique data from a world-wide survey of agents involved in international climate policy, we then study how participants assess the support of the equity criteria by major parties in the climate negotiations. Comparing these results with cost estimates from a POLES model, we find that the perceived equity preferences of the respective countries or groups of countries are in general consistent with our hypothesis of a self-serving use of equity criteria and thereby lend support for our theoretical model. While this self-interest is recognized by the participants of our survey for the positions of the USA and the G77/China as well as Russia, the EU manages to be seen as choosing (self-serving) equity arguments out of fairness concerns and in order to facilitate the negotiations.

Controlling Global Warming

In this exhaustive study, the authors break new ground by integrating cutting edge insights on global warming from three different perspectives: game theory, cost-effectiveness analysis and public choice. For each perspective the authors provide an overview of important results, discuss the theoretical consistency of the models and assumptions, highlight the practical problems which are not yet captured by theory and explore the different applications to the various problems encountered in global warming. They demonstrate how each perspective has its own merits and weaknesses, and advocate an integrated approach as the best way forward. They also propose a research agenda for the future which encompasses the three methods to create a powerful tool for the analysis and resolution of global pollution problems.

The evolution of cooperation in Prisoners' Dilemma with an endogenous learning mutant

Abstract We consider a population initially consisting of cooperators and defectors, who are engaged in a Prisoners’ Dilemma. A knowledgeable mutant is introduced who memorizes other players by experience. We derive a formal model which allows us to describe the growth of the mutant’s knowledge of defectors in a precise way. When meeting known defectors, the mutant is assumed to avoid exploitation by refusing interaction. Otherwise the mutant chooses the cooperative action. According to replicator dynamics there exists a fully mixed equilibrium, a two-type equilibrium with sophisticated cooperators and defectors and the defectors-only corner solution. Depending on the parameters, these equilibria are globally stable.

Das Coase-Theorem

Wenn Markte versagen, dann zieht das in der Regel den Ruf nach dem Staat nach sich. Die laisser-faire Konzeption der Wirtschaftspolitik basiert auf der Annahme, dass Markte aus sich selbst heraus ein optimales Ergebnis hervorbringen. Wir haben gesehen, dass Markte prinzipiell tatsachlich in der Lage sind, ein Maximum an sozialer Wohlfahrt zu generieren, allerdings war dieses Resultat an eine Reihe von sehr restriktiven Voraussetzungen geknupft. Wir haben uns ausfuhrlich klar gemacht, dass bei Vorliegen von externen Effekten Marktgleichgewicht e ihre Effizienzeigenschaft einbusen. Wahrend auf perfekten Wettbewerbsmarkten individuell rationales und eigennutziges Verhalten zu einem kollektiv rationalen Ergebnis fuhrt, wird diese Harmonie zwischen individuellem und gesellschaftlichem Interesse bei externen Effekten zerstort: Die okonomisch rationale und eigennutzige Verfolgung der eigenen Interessen fuhrt dann nicht mehr zu einem Maximum an gesellschaftlicher Wohlfahrt.

Russia's reluctance to ratify Kyoto: An economic analysis

It became apparent at the UN World Climate Change Conference, which took place from September 29 to October 3 in Moscow at the invitation of the Russian government, that ratification of the Kyoto Protocol by the Russian Federation is, at the least, uncertain. This could mean that the first international climate treaty will not become legally binding. What is the economic rationale behind Russian climate policy? What would be the effect of non-ratification?