The Garnaut Report and “Tit-for-Tat”

For those outside Australia, the Garnaut Climate Change Review is our equivalent of the Stern Review and last week a draft report was released. In this report, a nation’s decision as to how to act in the face of climate change is compared to the prisoner’s dilemma:

Effective international action is necessary if the risks of dangerous climate change are to be held to acceptable levels, but deeply problematic. International cooperation is essential for a solution to a global problem. However, such a solution requires the resolution of a genuine prisoners’ dilemma. Each country benefits from a national point of view if it does less of the mitigation itself, and others do more. If all countries act on this basis, without forethought and cooperation, there will be no resolution of the dilemma.

A staple of game theory, the classic formulation of the prisoner’s dilemma goes something like this. You have been arrested, along with your partner in crime. The two of you have been separated and are under interrogation. The police are light on evidence and they offer both of you the same deal. If you are the only one to talk, the reward for cooperation is that you go free, but your silent partner gets a ten year sentence. If both of you talk, your evidence is not so valuable, but your cooperation is still noted and you both receive a reduced sentence of five years. However, if both of you keep quiet, the lack of evidence means that you will both only get six months in jail. What should you do?

The classical analysis says you should always blab because no matter what your partner does, you will be better off. If he or she stays quiet, you will go free rather than getting five years, while if he or she spills the beans too, then you will get five years rather than ten. Of course, the problem is that if both of you follow the same reasoning, you will both get five years when a bit of cooperation would have resulted in a better outcome overall with only six months each.

If that was all there was to the analysis, it would paint a grim picture for international action on climate change. However, the situation changes significantly when you get to play the “game” repeatedly and you can both take into account each other’s previous behaviour. The mathematically formalised version of the game, known as the Iterated Prisoner’s Dilemma (IPD), has no police, no prison cells, just a series of decisions to either attack your opponent (i.e. blabbing) or to cooperate (staying silent) and scores for each outcome (the sentences). Famously, political scientist Robert Axelrod arranged a tournament in 1980 in which different computer algorithms were pitted against one another playing IPD. Strategies included randomly attacking or cooperating, always attacking or always cooperating. The winning strategy in the tournament, known as “Tit-for-Tat”, would intially cooperate but, if attacked, would attack back. Likewise, it was quick to forgive and would reciprocate any cooperation. Evolutionary theorists* have latched on to this phenomenon as an explanation for how cooperative behaviour can evolve in a natural world which we would otherwise expect to always be red in tooth and claw.

Of course, international diplomacy is certainly iterated over a long period of time, and so cooperation is an extremely powerful technique (admittedly some would argue that we don’t need computer tournaments to show us this!). While some point to the fact that Australia only contributes around 1.5% of world emissions to justify inaction (putting aside the fact that we are one of the highest per capita emitters), this ignores the fact that decisive action on the part of Australia will put us in a far better position to influence the behaviour of other countries. The applause Rudd received in Bali when announcing that Australia would ratify the Kyoto protocol shows how effective Tit-for-Tat can be.

* For more on the evolutionary biology story, an excellent account can be found in Matt Ridley’s book “The Origins of Virtue“.

Thanks to Nicole from the Climate Group for alerting me to some broken links.

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10 thoughts on “The Garnaut Report and “Tit-for-Tat”

  1. martin

    First, a couple of notes about my position on this.

    * Global Warming does exist
    * I believe some proportion (but definitely NOT ALL) Global Warming is man made
    * Some proportion (but definitely NOT ALL) Global Warming is due to Carbon based gases

    Our economy (if not our civilisation) is based on cheap energy. Everything from cheap clean water to powering Google data centers. Currently, most of this cheap energy is derived from petrochemicals – a carbon based fuel – in some way shape or form.

    Since these fuel supplies ARE running out, we need to move a non carbon based economy. Ethanol and other bio fuels are not very popular at the moment, due to their impact on fuel prices. However, I can see these being grown in places where foodstuffs can’t be grown.

    The other alternative is to give up carbon based energy altogether. With current technology, the only widely available power source would be Nuclear. (I would consider solar, hydro, tidal and geothermal to be too geographically specific). HOWEVER… Nuclear power is NOT a renewable energy source, so we would only be delaying the inevitable, unless there was sufficient R&D to develop alternative energy supplies.

  2. Mark L

    You make a worthwhile point about the game-theoretic motivations for co-operating to cut emissions; such arguments are important for convincing those who believe in acting only for individual, material gain. However, using the framework of game-theory risks implying that such a value system is valid, or even the only one possible.

    I think it is worth mentioning that basic moral reasoning runs in the same direction: we are causing (at least some) of the problem, and should therefore do what we can to stop unless doing so causes still worse harms. What constitutes a worse harm depends on what values you place on economic versus environmental damages. But making the planet essentially uninhabitable for the many species that cannot adapt or move quickly enough, and risking even human habitability, is a grievous wrong, while the first steps in cutting emissions will be cheap. No matter how small our relative contribution is, we are still morally responsible for it.

    @martin: Delaying the need for truly renewable energy sources would be a huge win by itself, so this isn’t a good argument against nuclear. Waste disposal, security risks and proliferation of weapons-usable technology are the real reasons why nuclear isn’t the panacea it might be in theory.

  3. Pingback: Australian Banks Get A Government Guarantee | A Stubborn Mule's Perspective

  4. Marco

    Hi Stubborn Mule,

    There is another more general version of the Prisoner’s Dilemma that is also very relevant. It’s called the Tragedy of the Commons [1] and it is associated to the biologist Garrett Hardin.

    The solution most economists had found for this problem was either that government intervention and regulation were required or that property rights should be given to a private enterprise, to administer the commons.

    Still, this year a “Nobel” Prize was awarded to Elinor Ostrom [2] for her work on this subject. She has studied situations where the commons can be successfully administered by their own users.

    [1] Tragedy of the commons.

    [2] Economic governance: the organization of cooperation.
    The Royal Swedish Academy of Sciences. Press Release, 12/10/2009

  5. Marco

    Thanks, SM, for the link to Ostrom’s interview.

    I confess I don’t know much about her work. It seems, according to what she says in the interview, she might have found a way of salvaging something from orthodox rational decision theory.

    But I’ve got to say, in general I am a bit skeptic about methodological individualism.

    I do know that it has been attempted before to model individual preferences in such a way as to incorporate variables affecting agents other than the decision-maker. But it was one of those things that appear, some people talk about them for a while and then disappear (at least, I haven’t heard anything new about this).

    Maybe when the “Nobel” lecture is released, a layman (like me) can have access to some more understandable material on Ostrom’s research.

    Anyway, if you are interested, let me know. I have some links and pointers to papers on the subject (but from a neoclassical perspective) that might be of interest to you.

  6. Marco


    Check your mailbox. I’ve sent an email, and it contains a few links, so Gmail might confuse it with Junk mail or Spam.



  7. Marco


    Today I came across this article:

    John Bellamy Foster and Brett Clark. “The Paradox of Wealth: Capitalism and Ecological Destruction”. The Monthly Review. November 2009.

    It touches many topics related to the Tragedy of the Commons, and related to hot topics in today’s Australian news, as you can see from these quotes:

    “In fact, the growth of natural scarcity is seen as a golden opportunity in which to further privatize the world’s commons. This tragedy of the privatization of the commons only accelerates the destruction of the natural environment, while enlarging the system that weighs upon it. This is best illustrated by the rapid privatization of fresh water, which is now seen as a new mega-market for global accumulation. The drying up and contamination of freshwater diminishes public wealth, creating investment opportunities for capital, while profits made from selling increasingly scarce water are recorded as contributions to income and riches. It is not surprising, therefore, that the UN Commission on Sustainable Development proposed, at a 1998 conference in Paris, that governments should turn to ‘large multinational corporations’ in addressing issues of water scarcity, establishing ‘open markets’ in water rights. Gérard Mestrallet, CEO of the global water giant Suez, has openly pronounced: ‘Water is an efficient product. It is a product which normally would be free, and our job is to sell it. But it is a product which is absolutely necessary for life.’ He further remarked: ‘Where else [other than in the monopolization of increasingly scarce water resources for private gain] can you find a business that’s totally international, where the prices and volumes, unlike steel, rarely go down?’39”

    Emission trading schemes:
    “Similar issues arise with respect to carbon-trading schemes, ostensibly aimed at promoting profits while reducing carbon emissions. Such schemes continue to be advanced despite the fact that experiments in this respect thus far have been a failure — in reducing emissions. Here, the expansion of capital trumps actual public interest in protecting the vital conditions of life. At all times, ruling-class circles actively work to prevent radical structural change in this as in other areas, since any substantial transformation in social-environmental relations would mean challenging the treadmill of production itself, and launching an ecological-cultural revolution.”



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