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Intergenerational Games with Dynamic Externalities and Climate Change Experiments

Katerina Sherstyuk, Nori Tarui (), Majah-Leah Ravago () and Tatsuyoshi Saijo ()

No 2015-7, Working Papers from University of Hawaii Economic Research Organization, University of Hawaii at Manoa

Abstract: Dynamic externalities are at the core of many long-term environmental problems, from species preservation to climate change mitigation. We use laboratory experiments to compare welfare outcomes and underlying behavior in games with dynamic externalities under two distinct settings: traditionally studied games with infinitely-lived decision makers, and more realistic intergenerational games. We show that if decision makers change across generations, resolving dynamic externalities becomes more challenging for two distinct reasons. First, decision makers' actions may be short-sighted due to their limited incentives to care about the future generations' welfare. Second, even when the incentives are perfectly aligned across generations, increased strategic uncertainty of the intergenerational setting may lead to an increased inconsistency of own actions and beliefs about the others, making own actions more myopic. Access to history and advice from previous generations may improve dynamic efficiency, but may also facilitate coordination on non-cooperative action paths.

Keywords: economic experiments; dynamic externalities; intergenerational games; climate change (search for similar items in EconPapers)
Pages: 58 pages
Date: 2015-05
New Economics Papers: this item is included in nep-env, nep-exp, nep-gth and nep-sea
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Related works:
Journal Article: Intergenerational Games with Dynamic Externalities and Climate Change Experiments (2016) Downloads
Working Paper: Intergenerational Games with Dynamic Externalities and Climate Change Experiments (2015) Downloads
Working Paper: Intergenerational games with dynamic externalities and climate change experiments (2014) Downloads
Working Paper: Inter-Generational Games with Dynamic Externalities and Climate Change Experiments (2013) Downloads
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