Information disclosure and dynamic climate agreements: Shall the IPCC reveal it all?

Abstract

This paper examines the role of public information communication in dynamic self-enforcing climate agreements. We consider a framework with implicit contracts but also a dynamic coalition formation context. In a stochastic game, where the social cost of Greenhouse Gasses (GHG) is an unknown random variable, an information sender, such as the Intergovernmental Panel on Climate Change (IPCC), controls the release of verifiable information about the unknown state variable to the countries. The equilibrium communication strategy of the IPCC takes a threshold form, above which the IPCC reveals all the information available, even if it hurts the prospect of approaching the socially optimum level of emissions. The case where the IPCC remains silent, below the threshold, vanishes as the sender gets perfectly informed about the underlying social cost.