Strategic reasoning and bargaining in catastrophic climate change games

Abstract

Two decades of international negotiations show that agreeing on emission levels for climate change mitigation is a hard challenge. However, if early warning signals were to show an upcoming tipping point with catastrophic damage, theory and experiments suggest this could simplify collective action to reduce greenhouse gas emissions. At the actual threshold, no country would have a free-ride incentive to increase emissions over the tipping point, but it remains for countries to negotiate their emission levels to reach these agreements. We model agents bargaining for emission levels using strategic reasoning to predict emission bids by others and ask how this affects the possibility of reaching agreements that avoid catastrophic damage. It is known that policy elites often use a higher degree of strategic reasoning, and in our model this increases the risk for climate catastrophe. Moreover, some forms of higher strategic reasoning make agreements to reduce greenhouse gases unstable. We use empirically informed levels of strategic reasoning when simulating the model.