Keeping Negotiations in the Dark: Environmental Agreements under Incomplete Information
AbstractThis 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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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2010-20.
Length: 32 pages
Date of creation: Dec 2010
Date of revision:
Signaling games; Unilaterial uncertainty; Bilateral uncertainty; Non-binding negotiations;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-23 (All new papers)
- NEP-CTA-2011-01-23 (Contract Theory & Applications)
- NEP-ENV-2011-01-23 (Environmental Economics)
- NEP-GTH-2011-01-23 (Game Theory)
- NEP-UPT-2011-01-23 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ana Espinola-Arredondo & Felix Munoz-Garcia, 2009.
"Free-riding in International Environmental Agreements: A Signaling Approach to Non-Enforceable Treaties,"
2009-08, School of Economic Sciences, Washington State University.
- 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.
- Ana Espinola-Arredondo & Felix Munoz-Garcia, 2009. "Free-riding in International Environmental Agreements: A Signaling Approach to Non-Enforceable Treaties," Working Papers 2009-08, School of Economic Sciences, Washington State University.
- 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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