Volume 29, Issue 1
DOI: 10.24205/03276716.2020.58
BEHAVIORAL PSYCHOLOGY ANALYSIS OF INDIVIDUAL DECISION, STRATEGIC INTERACTION AND CLIMATE GOVERNANCE
Abstract
Considering the limitations of standard economics in the research of climate governance, this paper employs the behavioral economics theory and behavioral psychology to explain the individual decision in the climate governance and the strategic interaction between countries. Firstly, realistic framework of behavioral economics was constructed, which covers psychological factors like quasi hyperbolic discounting, value function, loss aversion, fairness, and reciprocity. The established framework was then compared with the standard economic model. The main results are as follows: on individual decision, the bounded rationality is limited by the inconsistency between loss aversion and time preference, adding to the difficulty of emission reduction; on strategic interaction, fairness is the key to international climate negotiation; the negotiating parties should set fair rules on emission reduction and restrain the excessive self-interested behaviors of developed countries; the prisoner’s dilemma in international climate negotiation can be solved through cooperation and reciprocity between low self-interested parties; an effective communication mechanism is essential to the success of global climate governance.
Keywords
Climate Governance, Behavioral Economics, Individual Decision, Strategic Interaction, Prisoner’s Dilemma.