Game theoretic models for climate change negotiations

Negotiations to reduce greenhouse gas accumulation in the atmosphere are modeled as extensive games of perfect information. Various solution concepts, such as Nash equilibrium, reaction function equilibrium, correlated equilibrium and bargaining solutions are applied, analyzed and computed. Special reduction techniques are used when the size of the game tree becomes excessive. A new solution concept, the tree-correlated equilibrium is also introduced. Main features of an Excel add-in designed to compute various solutions are briefly described and a sample policy analysis for a special negotiating scenario is discussed.