Green investment and coordination failure: An investors' perspective. Mielke, J. & Steudle, G. Ecological Economics, 150(March):88–95, Elsevier, 2017. ![Green investment and coordination failure: An investors' perspective [pdf]](https://bibbase.org/img/filetypes/pdf.svg "pdf")
Paper doi abstract bibtex To achieve the goal of keeping global warming well below 2°C, private investors have to shift capital from brown to green infrastructures and technologies and provide additional green investment. In this paper, we present a game-theoretic perspective on the challenge of triggering such investments. The question of climate change mitigation is often related to the prisoner's dilemma, a game with one Nash equilibrium. However, the authors perceive investment for mitigation and adaptation as a coordination problem of selecting among multiple equilibria. To illustrate this, we model a non-cooperative coordination game, related to the stag hunt, with a brown equilibrium with lower payoffs that can be achieved single-handedly and a green equilibrium with higher payoffs that requires coordination. As multiple experiments show, in such games actors often fail to coordinate on a payoff dominant equilibrium due to uncertainty. Thus, we discuss how uncertainty could be reduced along two options: one that concerns a change in the payoff structure of the game and another that concerns subjective probabilities.
@article{Mielke2017b,
abstract = {To achieve the goal of keeping global warming well below 2°C, private investors have to shift capital from brown to green infrastructures and technologies and provide additional green investment. In this paper, we present a game-theoretic perspective on the challenge of triggering such investments. The question of climate change mitigation is often related to the prisoner's dilemma, a game with one Nash equilibrium. However, the authors perceive investment for mitigation and adaptation as a coordination problem of selecting among multiple equilibria. To illustrate this, we model a non-cooperative coordination game, related to the stag hunt, with a brown equilibrium with lower payoffs that can be achieved single-handedly and a green equilibrium with higher payoffs that requires coordination. As multiple experiments show, in such games actors often fail to coordinate on a payoff dominant equilibrium due to uncertainty. Thus, we discuss how uncertainty could be reduced along two options: one that concerns a change in the payoff structure of the game and another that concerns subjective probabilities.},
author = {Mielke, Jahel and Steudle, Gesine},
doi = {10.1016/j.ecolecon.2018.03.018},
issn = {0921-8009},
journal = {Ecological Economics},
keywords = {DOLFINS{\_}T2.2,DOLFINS{\_}WP2},
mendeley-tags = {DOLFINS{\_}T2.2,DOLFINS{\_}WP2},
number = {March},
pages = {88--95},
publisher = {Elsevier},
title = {{Green investment and coordination failure: An investors' perspective}},
url = {http://www.globalclimateforum.org/fileadmin/ecf-documents/publications/GCF{\_}Working{\_}Papers/GCF{\_}WorkingPaper1-2017.pdf},
volume = {150},
year = {2017}
}
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