So, It's All A Game? - Impacts Of Game Theory In The Environmental Arena

Game theory is ‘the study of mathematical models of conflict and cooperation between intelligent and rational decision-makers.’ Today, game theory applies to a wide range of behavioural relations, and is now an umbrella term for the science of logical decision-making. It has emerged as a powerful new tool in environmental economics, especially in the study of transboundary pollution problems, such as global warming and acid rain. Here, Mahazareen Dastur looks at how a very clever blend of economics and mathematics can help answer some of the most vexing environmental issues. She dwells on the nitty-gritties and nuances the game theory and illustrates with suitable examples of how the game theory influences environmental issues.

Most of us cannot appreciate why we need to learn higher mathematics during our schooling and college years, particularly because we believe we would never apply this knowledge to our everyday lives. However, the application of this subject to various fields has been well recognized, be it the landing of the first ever human on the moon in 1969, number crunching in computers, studying ocean currents, predicting the weather, and so much more.

The Game Theory

The game theory is one such mathematical application. The extended version of this theory was devised by John Forbes Nash, Jr, mathematician, who won the Nobel Memorial Prize in Economic Sciences in 1994 along with John C Harsanyi and Reinhard Selten. Game theory has proved to be a fertile ground for Nobel Prize winners. For example, Roger B Myerson (the 2007 joint Nobel Prize winner for Economics) applied game-theoretic tools to political science, analysing how political incentives can be affected by different electoral systems and constitutional structures. Thus, over the years, game theory has come to be recognized as a tool to solve problems in many fields, including economics and, surprisingly, the environment.

Essentially, many problems in the real world involve group decisions. Such problems are called ‘games’ by mathematicians and economists, wherein one party’s decision is influenced by the actions of another party and vice versa. In essence, game theory attempts to mathematically capture behaviour in situations that demand each player (which could be a government, a company, a person, etc.) to devise a strategy or behaviour in response to specific situations.