Climate treaties with reciprocal preferences

The project develops a simplified theoretical analysis of participation in international environmental agreements if countries behave as if they have reciprocal preferences, i.e., a preference to repay mean intentions by mean actions and kind intentions by kind actions. It is shown that when few others are expected to abate, reciprocal countries are even less willing to abate than countries with standard preferences. However, if all countries have strong preferences for reciprocity, the grand coalition of all countries can be stable as well. The reason is that others' abatement increases the individual country's motivation to contribute. Moreover, if not all countries are reciprocal, a large (but less than full) coalition can be stable if the share of reciprocal countries is strictly more than half, and if these countries are sufficiently strongly reciprocal. In addition, there can exist a stable minority coalition which is larger than the maximum coalition size with standard preferences. In this situation, each coalition member is disappointed with others' behavior and is willing to sacrifice own material welfare to punish them. In spite of this, the minority coalition is stable, for the following reason: Each coalition member knows that if it leaves, the coalition will dissolve. It will then choose to stay, because this is the only way it can keep a small island of kindness in a world of meanness; if it leaves, the world becomes universally mean.


Published June 8, 2017 12:39 PM - Last modified June 10, 2017 5:24 PM