Environmental Remedies: an Incomplete Information Aggregation Game

The burden of resolving an environmental problem is typically shared among several responsible parties. To clarify the nature and extent of the problem, these parties must provide information to the regulator. Based on this information, the regulator will instigate an investigation of the problem, to determine an appropriate remedy. This paper investigates the incentives facing agents to promote excessive investigation and postpone remediation. Our incomplete information game-theoretic model may be of general interest to game theorists: we apply a new theorem guaranteeing pure-strategy equilbria and introduce a class of games called “aggregation games” which have interesting properties and are widely applicable. JEL classification: D82, Q28