Introduction
The following question was put the the President of the World Bank, Dr. Jim Yong Kim by my MP, Geoffrey Clifton-Brown
“How does the World Bank expect the global
economy to take the painful steps necessary to address climate change when the
world’s most powerful economic blocks remain locked in nuclear weapon standoffs
which is terrifying them into borrowing trillions of dollars for weapons that
will outlast civilisation as it collapses from climate change and which force
preservation of business as usual to the very end?”
This question is considered in the
context of Game Theory, where a game is a defined as a decision making scenario
where players must take a decision such that the outcome to them is dependent
on that made by the other players.
In the question above, the outcome to
the players in a game (i.e. climate change) is also dependent on the outcome
made in in other
games (i.e. nuclear weapons). There are three fundamental games at play which
are described below.
The first is the game of climate change negotiations which generally is
assumed to be about obtaining an agreement to cut CO2 emissions. However, past
failure to do so, means that this must now also be about agreeing to the
adaptation measures to be taken. So far, despite all the hype of renewables,
global consumption of fossil fuels is continuing to push atmospheric CO2 deeper
into the danger zone. It is hypothesised that nations are compelled to do this to
maintain economic and military advantage. This is backed up by past evidence at
critical decision making points. For example, the US Congress voted unanimously
against inclusion into the Kyoto 1 agreement because it would have constrained
its military while not constraining its adversaries in the same way and in the
Copenhagen COP China refused to make any commitments to cut back coal
consumption as it was intent on out competing Western economies.
The second is the game that nuclear weapons states must play on the size
and operational status of their arsenals; the decisions in this game have
always been about how to make cuts in the size of the arsenals and to minimise
the risk of a premature launch by taking weapons off high alert status while trusting
others to do the same. These agreements must be made in a world becoming more
unstable due to climate change and where the risk of a pre-emptive strike is
increasing due nuclear weapons proliferation.
The third game, in reference to the borrowing needed to fund the pursuit
of nuclear weapons in the above question, is about maintaining the debt based
economic system that military industrialisation competition needs. The
fundamental assumption behind its modus operandi is that there is no limit to
growth and things that we cannot afford now can be paid in the future by virtue
of continued economic growth. However, once this impossibility is to be
acknowledged then an economic system such as a carbon rationing or a carbon
taxation must be introduced. Without this no agreement on climate change will
be reached as fossil fuel consumption will continue to rise and the tensions it
causes will propel nations towards nuclear weapons. However, once this is
imposed it makes funding a military industrial complex impossible, so security
must come centre stage to the negotiations.
Thus the three games outlined above are connected in a deadly dilemma.
In an attempt to understand the dynamics of interconnected games a series of
experiments were run across thee maths classes which extended the concept of
the prisoners dilemma.
The basis of the experiment was as follows:
A class was given the opportunity to win either £1.50 which they could
share amongst themselves or one person could win a bar of chocolate, which has
a monetary value of 70p.
The game consisted of splitting the class into competing pairs of
students. Each student in each pair is given two cards, one says “I love you and want to work for you and will
do anything for you,” the other says “XXXX
you buddy.” See Appendix A for the cards.
The rules are simple:
If both students play “I love you
and want to work for you and will do anything for you” the cost of their
love is £2 each.
If both students play “XXXX you
buddy” the cost of their love is £8 each.
If one student plays “I love you and want to work for you and will do anything for you” and
the other plays “XXXX you buddy,”
then the student who plays the “I love
you” card gets charged £10 for his love as a punishment for being so stupidly
trusting and the one that plays the “XXXX
you buddy” card gets charged only £1 as a reward for his ruthless thuggery.
The objective is to minimise the cost of love and the dilemma is clear.
If both players trust each other and play the “I love you card,” the total cost of their love is £4. If both
mistrust each other and play the “XXX you buddy,” total cost of their love is
£16 as they seek to minimise their individual costs.
To play the game, the combined cost of love over five rounds was
calculated and if this was kept below a given level, then the class could share
the prize of real money. If not the person with the lowest cost of love could
get the chocolate bar.
Thus the challenge is that a player not only has to trust his competitor,
but also has to trust the outcome from the games that other competing pairs are
playing.
The payoff matrix replicates the dilemma of nations making decisions on climate change. Two nations could decide to pursue a zero-carbon economy and it might cost them say £2billion. However, if a nation’s competitor refuses to convert to zero carbon and pursues a fossil economy then the cost to the nation that opts for the zero-carbon economy rises to £10billion as a result of having to cope with the resulting ecological damage and the loss of competitive advantage, while the cost to the nation that maintains a fossil fuel economy is only £1billion as it is able to seize food and resources from its weaker rival. If on the other hand, both nations decide to maintain a fossil fuel economy, the minimum cost will be £8billion to both from the ecologic damage incurred, but by maintaining competitive advantage neither will be liable for the full cost. The actual costs are immaterial, all that counts is the relative values with respect to the choice, see Appendix B for the pay-off matrix.
The results follow for three classes:
Class 1
The target was to get
“the cumulative cost of their love” below £90 across four simultaneous games
and over five rounds. If all students played the love card, the minimum cost of
their love would be £80, thus allowing two players to default and still win the
money.
The results follow:
Conclusion of the game
In the first round, one
player in each game played the “XXXX you
buddy” card. The result was that it would be impossible for the class to
win the money. Players in Games 1 and 2 collaborated and agreed to stick to the
pattern of one player playing “XXXX you
buddy” and the other playing “I love
you.” This ensured that one player would get the lowest possible score and
so win the bar of chocolate; the cost for this is that the bar of chocolate
would have to be shared with amongst all the players in Games 1 and 2.
Players in games 3 and 4
were not party to this agreement and so got nothing at the end.
Once the result became a
foregone conclusion and the target for the minimum cost of love could not be
achieved, players effectively lost interest but carried on out of a sense of
duty.
Implications
In this game, once the initial sub optimal positions were set across all
the games it was difficult to move away from it. This reflects the difficulty
that nations face in negotiations when they have to move significantly from the
positions that they have previously taken based on self-interest to those that are
in the best interests of all parties.
Thus globally, nations that have already committed to high carbon and
militarised societies will become entrenched in these positions, not just because
of the conversion difficulty, but also because of the responses from other
players that will be determined on the results of past rounds.
Once the result becomes fixed, interest in the game diminishes. This was
reflected in the last UK election where climate change was not considered,
despite the scientific community screaming for urgent and extreme action.
However negotiations continue out of a sense of duty, thus the UK will continue
sending delegates to the climate change conferences despite the impossibility
of achieving a satisfactory result.
Despite the groups being unable to co-operate across all the games,
small scale co-operation was made between games 1 and 2 to share the suboptimal
prize (the bar of chocolate). This is reflective of the co-operation that is
seen between states who are close competitors. Thus, the European and US co-operated
on trade pacts and military alliances while Russia and China likewise
co-operate on military and energy policies. However in each case the win from
the localised co-operation is far less than that obtainable from globalised
co-operation.
Class 2
The target was to get
“the cumulative cost of their love” below £90 across four simultaneous games
and over five rounds. If all students played the love card, the minimum cost of
their love would be £80, thus allowing two players to default and still win the
money.
The results follow:
Conclusion of the game
In the first three rounds all players co-operated to play the “I love you” card and were on track to keep
the cost of their love below £90 and win the money prize.
However, in round 3 the co-operation fell apart. One player reneged on
the agreement and by being the only player to play the “XXXX you buddy” card stole a lead on the rest of the players. In
the last round, all players could still win the money, however the player who
had previously played the “XXXX you buddy”
was now incentivised to play the same strategy. If he played “XXXX you buddy” he would definitely win
the bar of chocolate, even if someone else did the same. This is exactly what he did. At the end of
the game he graciously shared the bar with his opponent, who both ate it and left.
The rest sat there bemused.
This is the emergence of a free-for-all scenario. It occurs when one
player reneges on an agreement that has only a minimal chance of delivering the
optimum solution even if all the other players are still prepared to work
towards the wider agreement.
Implications
China has already embarked on a free-for-all strategy. Its carbon
emissions initially from coal, and now from oil, are massively out of
proportion to the rest of the world. They have effectively played the “XXXX you buddy” card against the rest of
the world. From the outside, it is as if they have already decided that there
is no point in going for a climate change agreement, so they will race to get
everything they can while they still can. It is a highly dangerous strategy. If
everyone reciprocates, then no one will survive. Even if no nation follows it,
no one will survive. It is of note that India is now following China’s path as
its closest competitor.
Class 3
The target was to get “the cumulative cost of their love” below £65
across three simultaneous games and over five rounds. If all students played
the love card, the minimum cost of their love would be £70, thus allowing two
players to default and still win the money. In the last round the minimum cost
of love was reduced to £65
The results follow:
Conclusion of the game
The dynamics of this group were considerably different to the others.
The sat closer together and spent more time discussing strategies between them.
Their success in the first round of getting all to agree along with the
communication they had set up between them provided the basis for reinforcement
such that it became difficult to change the pattern that had been established.
It is a similar observation to that of the first class, except that class had
become stuck on the sub-optimal solution.
As they entered the last round still with no defections, the target for
the minimum cost of love was reduced to £65 to incentivise someone to defect.
Even this did not break the pattern that had now emerged as the social pressure
to comply was so much greater than the temptation to go for personal gain.
On winning the £1.50 the class immediately went to college shop and
bought two bars of chocolate which they shared equally amongst each other.
The class acknowledged that they were only able to achieve this because
they were working closely together and said that had each competing pair been
sitting in different rooms they would not have been able to achieve this. Their success may also have been enabled by
only three simultaneous games being played, rather than four.
Implications
If multiple games are being played where the result from one can adversely affect the other, then the games must be interconnected to achieve the optimum result, hence climate change, nuclear weapons and economic reform talks must be fundamentally interconnected in the same way that success was achieved by Class 3 by working closely together across all three games.
In these circumstances the optimum position can be achieved
By contrast the problems that Classes 1 and 2 identified was the tendency for the games to become easily stuck in a suboptimal position as soon as a single player in one game achieved competitive advantage in a single game and in so doing reduced the probability of a best collective agreement being achieved.
The challenge facing nations is that the prizes are somewhat different, and much more is at stake. Instead of the combined money prize of £1.50 for collaboration, the prize now is survival. Instead of mendacious behaviour being rewarded by a chocolate bar that can be shared with nearest competitors, the prize for mendacious behaviour is that a nation will be able preserve wealth right up to the point of their inevitable extinction. Neither is a great result.
If any optimism can the taken from this, it is that a clear interconnection between the games being played does enable the best collective result to be obtained, but this must first overcome the entrenchment caused by past actions.
Appendix A - Playing cards
Appendix B - Pay off matrix
