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Keeping Negotiations in the Dark: Environmental Agreements under Incomplete Information

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  • Ana Espinola-Arredondo
  • Felix Munoz-Garcia

    ()
    (School of Economic Sciences, Washington State University)

Abstract

This paper investigates the role of uncertainty as a tool to support cooperation in international environmental agreements. We consider two layers of uncertainty. Under unilateral uncertainty treaties become successful with positive probability in the signaling game, even under parameter conditions for which no agreement is reached under complete information. Under bilateral uncertainty, a separating equilibrium emerges where the leader participates in the treaty only when its environmental concerns are high. We show that the agreement is signed for larger sets of parameter values under unilateral uncertainty. We then show that further layers of uncertainty might enhance social welfare.

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File URL: http://faculty.ses.wsu.edu/WorkingPapers/AnaEspinola/WP2010-20.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2010-20.

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Length: 32 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:wsu:wpaper:espinola-7

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Keywords: Signaling games; Unilaterial uncertainty; Bilateral uncertainty; Non-binding negotiations;

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  1. Ana Espínola-Arredondo & Félix Muñoz-García, 2011. "Free-riding in international environmental agreements: A signaling approach to non-enforceable treaties," Journal of Theoretical Politics, , vol. 23(1), pages 111-134, January.
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Cited by:
  1. Michael Jakob & Kai Lessmann, 2012. "Signaling in international environmental agreements: the case of early and delayed action," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 12(4), pages 309-325, November.

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