Game Theory and Negotiations to Establish Cooperation in the Areas of the Environment, Trade, and Human Rights

Course Organization

E070 -  6 ECTS
Mondays 16:15-18:00 (R2)

 

Professor
Prof. Urs Luterbacher
urs.luterbacher(at)graduateinstitute.ch
+41 22 908 5940
Office hours:
Tuesdays 16h15 – 18h00
Rigot (25)                    

 

Assistant
Colin Nippert
colin.nippert(at)graduateinstitute.ch
+41 22 908 5951
Office hours:
Tuesdays 12h15 – 14h00
Rigot (38)

 

Course Description

International environmental trade and human rights problems  raise particular issues for international cooperation. Usually, global environmental change problems are characterized as commons  where the relevant metaphor is in terms of a resource to which everybody has free access and thus an incentive to use as much of it as possible without regard to what the other users are doing.  If every user has the same attitude, the resource is rapidly depleted and the environment to which it belongs is no longer sustainable. This conclusion is also valid for global resources such as the atmosphere or the oceans which have therefore been referred to as global commons. Trade and Human rights issues present sometime different  sometimes similar structures. Such incentive structurs generate conflict and cooperation problems which can be anlyze with the help of Game Theory.  Game theoretical ideas and concepts have been applied to several critical issues:

1. Determining  the incentives of various relevant actors (states, corporations, individuals) concerned by commons under different conditions.

2. Solving conflicts generated by commons issues in which often actors see each other as preying on exhaustible or slowly renewable resources. How can such conflicts be solved?

3. Elaborating policies that would appear to be optimal to avoid the problems raised by commons. 

4. Negotiating the regulation of the international environment. In these  complex negotiations among international actors, governments are often caught between international and domestic pressures on these issues. The metaphor of  two level games has been introduced by Putnam to analyze political situations characterized by such cross-pressures.

5. Accommodating different requirements of parallel environmental regimes. Environmental regulations and accords can create potential conflicts with other types of international arrangements such as for instance trade and financial regimes. How can such situations be avoided?

6. To what extent are trade issues of a different nature?

7. What are the game theoretical structures that characterize human rights issues?

This seminar intends to give students a survey of game theoretical concepts, ideas, and methodologies and of the ways these can be applied to the issues of coping with commons problems, environmental bargaining negotiations, and agreements at the international level.  Particular attention will be given to bargaining of agreements about resource use, ozone layer protection and climate change with some emphasis on the latest developments such as the Kyoto protocol of the Framework Convention on Climate Change and their implications for the general problems linked to international cooperation.

 

Requirements

2 Game Theoretical exercises and 1 essay applying game theory to a concrete  problem: environment, trade, confllict in general.

 

Course organization and work schedule

The excellent book by Martin Osborne called An Introduction to Game Theory presents a readable review of game theoretic concepts and ideas presented in simple ways that most anybody familiar with a bit of algebra can master.  I will use it as a textbook to accompany the course.

 

Sept.  22: General Introduction to Course: Substance, Organization, Requirements

 

Sept. 29: Substantive Introduction: Overview of Questions

• Hardin, Garret, (1968) The Tragedy of the Commons, Science, 162:1243-48.
• Dasgupta, P.S. and G. M. Heal (1979) Economic Theory and Exhaustible Resources. The Cambridge economic Handbooks, Cambridge: Cambridge University Press. Chapters 1, 2 (pages11-21 especially discussion about different equilibrium concepts)

 

Oct. 6: The Problem of the Commons

• Dasgupta, P.S. and G. M. Heal (1979) Economic Theory and Exhaustible Resources. The Cambridge economic Handbooks, Cambridge: Cambridge University Press. Chapt.  3.

 

Oct. 13:  Representing actors incentives:

• Osborne, Martin J. (2004) An Introduction to Game Theory New York ,Oxford: Oxford University Press: Chapt. 1 (Introduction).

 

Oct. 20: Rational Choice and Decision Theory under Uncertainty: Histrory and Methodology

• Bernstein, Peter (1998)  Against the Gods Introduction, Chapt. 6 and Chapt. 7
• Fishburn, Peter  (1990) Utility Theory and Decision Theory. In John Eatwell, Murray Milgate, and Peter Newman, Utility and Probability, The New Palgrave, New York: W.W. Norton and Co. pp. 303-312.

 

Oct. 27 Perfect Information: Equilibrium Notions

• Osborne, Martin J. (2004) An Introduction to Game Theory New York ,Oxford: Oxford University Press: Chapt.  2 plus glance at Mathematical Appendix, Chapt. 3: 3.1, 3.3, 3.4

 

Nov. 3  Mixed Strategies and Extensive Games

• Osborne, Martin J. (2004) An Introduction to Game Theory New York, Oxford: Oxford University Press: Chapts. 4, 5, 6 : 6.1, 6.3. Chapt. 7: 7.3, 7.4.

 

Nov.10 (to be postponed) Multilateral Questions, Coalitional Games and the Core

• Osborne, Martin J. (2004) An Introduction to Game Theory New York, Oxford: Oxford University Press: Chapt. 8:  8..1, 8.2, 8.3, 8.6, 8.8.
• Luterbacher, Urs(1994) International Cooperation: The Problem of the Commons and the Special Case of the Antarctic Region, Synthese 100: 413-440.
• Eyckmans Jon and Henry Tulkens (2003) Simulating coalitionally stable burden sharing agreements for the climat change problem Resource and Energy Economics, In press.
• Greif, Avner (1993) Contract Enforceability and Economic Institutions in Early Trade:  The Maghribi Traders’ Coalition, The American Economic Review, 83, 3, 525-548.
• Barrett, Scott (1998) A Theory of International Co-operation, Working Paper, Johns Hopkins University School of Avanced International Studies.

 

Nov. 17 Imperfect Information and Evolution

• Osborne, Martin J. (2004) An Introduction to Game Theory New York, Oxford: Oxford University Press: Chapt. 9: 9.1-9.5.  Chapt. 10: 10.1-10.5, 10.8, 10.9, Chapt. 13: 13.1, 13.2.

 

Nov. 24 Bargaining

• Osborne, Martin J. (2004) An Introduction to Game Theory New York, Oxford: Oxford University Press: Chapt. 16

 

Dec.1  The Environment, Trade and Human Rights: Two Level Problems

• Putnam R.D. (1988) Diplomacy and Domestic Politics: The Logic of Two Level Games. International Organization 42: 429-460.
• Pahre, R. and A Papayoannou (1997) Using Game Theory to Link domestic and International Politics Journal of Conflict Resolution. 41, 1: 4-11.
• Mansfield, Edward D., Milner Helen V. and Peter Rosendorff “Free to Trade: Democracies, Autocracies and  International Trade” Amercian Political Science Review, June 2000.

Application to Concrete situations I

 

Dec. 8 Equity Problems, Conflicts between Regimes, Trade and Human Rights Issues, Application to concrete situations I

• Barrett, Scott (1992) Acceptable Allocation of Tradable Carbon Emission Entitlements in a Global Warming Treaty. In Combating Global Warming: Study on a Global System of Tradable Carbon Emission Entitlements. Geneva: UNCTAD, RDP/DFP/1: 85-113
• Chichilnisky, Graciela (1997)  Development and Global Finance: The Case for an International Bank of Environmental Settlements, UNDP Discussion Paper Series.
• Muller, Benito (1998) Justice in Global Warming Negotiations. Oxford, Oxford Institute for Energy Studies, Ms.
• Wiegandt Ellen (2001) “Climate Change, Equity and International Negotiations”  in Luterbacher Urs and Detlef Sprinz International Relations and Global climate Change Cambridge, MA: MIT Press: 127-150.

Dec. 15: Application to Concrete situations II