Social Opinion and the Use of Common Property Resources∗

Public opinion formation plays a very important role in economic policy development. Opinions put forward in various social platforms offered by the media and the Internet have a large impact on international treaty negotiations. In particular this seems to be the case for international negotiations regarding the abatement of greenhouse gasses. In this paper we argue that social opinion formation can be represented as part of a game-theoretic equilibrium concept that transcends the standard Nash equilibrium concept. We discuss its application to treaty negotiations in the context of a model of the tragedy of the commons representing the international environmental situation. We conclude that social opinion formation in most cases has a significant impact on their outcomes and effectiveness. 1 The environment and social opinion formation The current climate debate and the negotiations over global emission reductions bring up multiple pressing questions for economists and game theorists. Economists can contribute to the public debate on these issues by clarifying the incentives of decision makers, in particular the participants in such negotiations regarding global emission reductions. In this paper we discuss an innovative approach for understanding the various influences on negotiators. Central among these is the influence of public discourse on the negotiations. Negotiators, representing certain populations of economic subjects, are usually strongly influenced by public opinion formation regarding global warming and the effects of emission abatement on environment and the economy. ∗We thank Cees Withagen for an enlightening discussion with one of the authors about this work and participants in the 2008 International Meetings of the Social Choice and Welfare Society in Montreal for their useful questions. †Department of Economics, Temple University, Philadelphia, PA. Email: [email protected]. ‡Department of Economics, Virginia Tech, Blacksburg, VA 24061. Email: [email protected]. Financial support from the Netherlands Organization for Scientific Research (NWO) is gratefully acknowledged.