Game theory, Bioeconomic Models and Fisheries Lecture 8.
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Transcript of Game theory, Bioeconomic Models and Fisheries Lecture 8.
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Game theory, Bioeconomic Models and Fisheries
Lecture 8
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Outline of Talk
• Introduction to games and game theory;
• Why is game theory a useful framework for analyzing environmental problems?
• Game theoretic modeling and fisheries;
• Some general comments.
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3
What is a Game?
• “any activity involving 2 or more “individuals”, each of whom recognizes that the outcome for himself depends not only on his own actions but also those of others”;
• “A game is a description of strategic interaction that includes the constraints on the actions that players can take”.
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4
What is Game Theory?
• “multi-person decision theory or the analysis of conflicts and rivalry”.
• “a mathematical tool for analyzing strategic interaction between and among “individuals” who may be persons, firms, stakeholders, nations, etc.
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5
Strategic Interaction• Consider the following situations:
– (i) a few firms dominate a market, or – (ii) a few group of “individuals” have fishing
rights to a stock of fish, or – (iii) countries have to make an agreement on
environmental policy;
• Then each “individual” has to consider the others’ reactions & expectations with respect to their own decision.
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6
Describing a Game• The essential elements of a game:
– players (agents); – constraints, actions and strategies;– information set; – outcomes or solutions;– payoffs.
• A game’s description must include all the above.
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7
Key Assumption of Game Theory
• “each decision maker is “rational” in the sense that: – he is aware of his alternatives; – forms expectations about any unknowns; – have clear preferences; and – chooses her actions deliberately after some
process of optimization.
• Comment on evolutionary game theory.
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8
Types of Games
• Non-cooperative/cooperative games;
• Zero-sum games;
• One-shot/repeated games;
• Static/dynamic games.
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9
A Non-cooperative Game
• Each player takes the actions of the other as given, and chooses his or her own strategies to maximize own benefits; – No lines of communication;– No possibility for making binding contracts;– Existence of a solution (John Nash);– Usually undesirable outcomes emerge.
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10
A Cooperative Game• Players seek to maximize joint benefits;
– Good communication gives players chance to weigh possibility for cooperation;
– Incentive to cooperate: all may gain;– Cooperative with & without side payments;– Existence of solutions: Two requirements:
• Pareto optimality;
• The individual rationality constraint.
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• Gain in the system: NCC
2C
1C
C
A game-theoretic approach
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• Dividing the surplus is difficult but necessary in any cooperative game.
NCCSurplus
Sharing the benefits of cooperation
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13
Why is G.T. Promising for Studying Environmental Problems?
• Environmental resources are usually common pool resources;
• Multi-agent/multi-stakeholder situation;• Ea. stakeholder has an interest in the use of
resource, which it wants to enhance/max.;• Interest of stakeholders often conflicting;• Non-cooperation tempting but wasteful;• There is a need cooperation in the use of
environmental resources.
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Why International Agreements often fail: Applying Game Theory
• Let’s assume two countries are trying to reach an agreement about whether to ratify the Kyoto Protocol;
• Each country can either:– Emit at current level (high emissions);– Reduce current emissions by 5% (low
emissions).
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How to get Country B to Lower its Emissions
• Employ moral suasion;
• Allow country B to adopt different targets;
• Offer financial incentives or some other side payments to B;
• Threaten to introduce sanctions;
• Try technology transfer.
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Levels of Cooperation in Fisheries
• Will argue that shared fishery resources must be managed cooperatively, if they are to be sustained through time;
• Levels of cooperation (John Gulland, FAO)Primary - scientific cooperation only;Secondary - involves cooperation in active
management of resources.
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Secondary Level of Cooperation• Secondary level of cooperation (argues
Gulland) requires: • determination of optimal resource management
through time;• allocation of harvest shares;• effective enforcement of cooperative
arrangement.
• allocation issue is indeed a key one, BUT
– has to be addressed simultaneously with the other two issues.
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Categories of Shared Fish Stocks
• What sort of resources are amenable to game theoretic modeling?
A. transboundary - EEZ to EEZ; B. straddling (broadly defined) -stocks to be
found within the EEZ and adjacent high seas; C. discrete high seas stocks; D. Domestic, shared resources.
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Shared Fish Stocks
CoastalState I
CoastalState 2
EEZ I
EEZ 2
A
B
C
A – Transboundary stocks
B – Straddling stocks
C – Discrete High Seas stocks
HIGH SEAS
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Management of Transboundary Stocks
• 1982 UN Convention: coastal states sharing resource must seek to cooperate, but not required to reach agreement
– thus non-cooperative management allowed - the default option
• Two questions for economists:1. what are the consequences, if any, of the default
option?
2. what conditions must be met, if cooperative management regime is to be stable over long run?
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Non- cooperative Management(the default option)
• Answer Question (1): serious risk that the “players” will be driven to adopt inferior, and possibly destructive, polices –the “Prisoner’s Dilemma” (PD) -world’s most famous competitive game;
• The case of Pacific salmon - Canada and the US.
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Cod in the Barents Sea – Norway/Soviet Union (Russia)
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Pacific salmon – Canada/US
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Tuna in the Coral Triangle
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Philippines
Fiji
Malaysia
Papua New Guinea Solomon
Islands
Indonesia
Distant Water Fishing Nations (DWFN)
Tuna in the Coral Triangle
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Adults migrate in to spawn
Juveniles migrate outPurse seine
Longline
Players: Purse seine vs. Longline
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Hake in the Benguela LME