How to involve individuals in personal carbon trading? A game model taking into account the heterogeneous emotions of government and individuals

Daoyan Guo, Hong Chen () and Ruyin Long ()
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Daoyan Guo: China University of Mining and Technology
Hong Chen: China University of Mining and Technology
Ruyin Long: China University of Mining and Technology

Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, 2019, vol. 95, issue 1, No 25, 419-435

Abstract: Abstract The implementation of personal carbon trading (PCT) scheme is urgently required in the context of low-carbon development. It is a key issue and a difficult problem for government to design the pattern of involving individuals into PCT scheme. Based on the rank-dependent expected utility theory, game model and numerical simulation were employed to analyse the influences of the heterogeneous emotions of government and individuals on their equilibrium strategies about the pattern of implementing PCT scheme. The findings show that the emotions of government and individuals cannot influence the equilibrium of pure strategies, but do affect the equilibrium of the mixed strategy. Further analysis shows that the strategy of government can be influenced by individuals’ emotions, and government will move towards the “mandatory pattern” strategy when individuals are optimistic and towards the “voluntary pattern” strategy when individuals are pessimistic. Additionally, the strategy of individuals can be affected by government’s emotions, and individuals will move towards “rejection” strategy when government is optimistic and towards the “participation” strategy when government is pessimistic. Therefore, the most expected emotional state for government is to remain pessimistic and to keep individuals optimistic. This study demonstrated the effects of the heterogeneous emotions of government and individuals on the equilibrium strategies about the pattern of implementing PCT scheme, provided policy suggestions for the pattern of implementing PCT scheme, and contributed to the successful implementation of future PCT scheme as well as the achievement of global carbon emissions targets.

Keywords: Personal carbon trading; Mandatory pattern; Voluntary pattern; Rank-dependent expected utility; Game model (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11069-018-3496-4

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