Intergenerational games with dynamic externalities and climate change experiments

Katerina Sherstyuk, Nori Tarui and Majah-Leah Ravago

No SDES-2014-14, Working Papers from Kochi University of Technology, School of Economics and Management

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 an intergenerational setting may lead to an increased inconsistency of own actions and beliefs about the others, making own actions more myopic. Intergenerational learning through history and advice from previous generations may improve dynamic efficiency, but may also lead to persistent myopic bias.

Keywords: economic experiments; dynamic externalities; intergenerational games; climate change (search for similar items in EconPapers)
Pages: 70 pages
Date: 2014-11, Revised 2014-11
New Economics Papers: this item is included in nep-ene, nep-env, nep-exp, nep-gth, nep-hpe and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Published in SDE Series, November 2014, pages 1-70

Downloads: (external link)
http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2014-14.pdf First version, 2014 (application/pdf)

Related works:
Journal Article: Intergenerational Games with Dynamic Externalities and Climate Change Experiments (2016)
Working Paper: Intergenerational Games with Dynamic Externalities and Climate Change Experiments (2015)
Working Paper: Intergenerational Games with Dynamic Externalities and Climate Change Experiments (2015)
Working Paper: Inter-Generational Games with Dynamic Externalities and Climate Change Experiments (2013)
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