In our introduction to game theory we learned about the famous Prisoners’ Dilemma, in which two prisoners given the option to confess or not confess their crime, will always both confess, despite the Pareto Efficient outcome of both not confessing. This is because their dominant strategy is to confess as it will always provide them with a greater payoff.

This dilemma is seen in the real world in many situations. For companies choosing levels of advertising in a business in which the market is saturated, each company will spend a great deal of money advertising and split the profits in the same way that they would if neither company spent money on advertisements. However both companies will advertise, because like the prisoners, it is in their best interest to do so. No matter what the other company does, they are always better off advertising.

Recent concerns of climate change have created a political Prisoners’ Dilemma, in the form of governments taking action against climate change, or not taking action. Countries will benefit if climate change is prevented whether or not they help to stop it. A government can persuade other countries to take action, while doing nothing, and will reap the benefits. This free-rider problem creates a Prisoners’ Dilemma, in which countries tell each other how important it is to fight climate change, and curb emissions, but subsequently do nothing about it.

However, on the issue of climate change, it is a game that is played more then once. When we look at the Iterated Prisoners’ Dilemma, in which the Prisoners’ Dilemma is played as a repeated game, the results can change. Each time the prisoners can confess or not confess. But now there is a trigger strategy, or punishment strategy, by which if a prisoner confesses in one round, the other prisoner threatens to confess every round after. So each time the game is played after a confession, the result is that both prisoners confess in each subsequent game. If prisoners play this type of dynamic game, in which they play the game an infinite number of times or with some probability of the game ending each round, it is possible to achieve the Pareto optimal outcome of both prisoners not confessing. There is some critical discount factor by which if they discount their future payoffs, the sum of their discounted payoffs of not confessing is greater than then payoff of confessing in the first round, and then confessing each round forever after. If there is some probability of the game ending each period, the Pareto optimal outcome is also possible, as long as that probability is small enough for the expected payoff from not confessing each round with the probability of not playing again exceeds the expected payoff of confessing in the first round and each round after.

In his paper, “How to Save the Planet: Be Nice, Retaliatory, Forgiving & Clear”, Michael Liebreich applies the Iterated Prisoners’ Dilemma theory to the dilemma of countries’ lack of action against climate change. He explains that on the first round, all countries will not take action “on the grounds that others will solve it.” But when the players know they will play multiple times, they will begin to cooperate. They have an incentive to cooperate so as not to be punished by other countries in the subsequent rounds for their lack of action.

He cites Robert Axelrod’s “Evolution of Cooperation” (1985), a study that found “if you play a Prisoner’s Dilemma game, not once, but repeatedly, then what you are likely to see emerging is cooperative, rather than mutually destructive, behavior.” Axelrod created a computer program called, “Tit-for-Tat,” which “started each round by cooperating with its opponent, and then simply mirrored its opponent’s last move.” Axelrod found that the successful strategies that emerged involved being nice, retaliation, and forgiveness.

Liebreich describes the four strategies in detail:

· Be Nice. Start by cooperating, and never be the first to defect. Otherwise you have no chance of getting into the zone where you both cooperate repeatedly and rack up the best outcome over time.

· Be Retaliatory. If the other player defects, inflict a cost on him or her which is at least as severe – otherwise you open yourself to exploitation.

· Be Forgiving. If your opponent mends his ways after defecting, restore cooperation as quickly as possible, so that you can both get back to scoring highly on each round.

· Be Clear. Since there is no way to beat the Nice, Retaliatory and Forgiving strategy, if your opponent knows you are following it, there is no incentive for him or her to seek advantage – it will only destroy his or her score as well as yours.

Liebreich explains that because international climate change negotiations are much like an Iterated Prisoners’ Dilemma game, the game can provide insight for how countries should act to engender cooperation. He argues how and why “the US needs to start being Nice, Europe needs to learn to Retaliate, and the developing world needs to Forgive. All players bar Europe need to improve the Clarity with which they communicate their strategies.”

Although it provides a good framework for the Kyoto Protocol, the Iterated Prisoners’ Dilemma is not a perfect fit for the climate negotiations. Some flaws of the analogy are pointed out in an article in the Economist, “Playing Games With the Planet”. The article explains that in the real world, there are more then two players and governments can communicate and form alliances, complicating the dynamics of the game. Also, governments are not always consistent or rational in their actions. For example, most observers “assume that America’s policy on global warming will change in 2008, along with its president. And most countries’ willingness to act is presumably linked to the severity of global warming’s ill effects.” So the worse the climate gets, the more likely everyone will play.