Economic Incentives for Acting Green
INSTRUCTORS
AIM
This course studies economic actions to deal with climate change, ranging from government taxes on environmental pollution to “green” initiatives taken by firms. One salient fact about climate change actions is that they are not sufficient. To understand why, as well as to discuss potential solutions, we conceptualize climate change actions as collective, rather than individual, effort that is prone to externalities, coordination failures and resulting inefficiencies. Throughout the course, we will be using the analytical tools and models of game theory, including Prisoners’ Dilemma and public goods games, to emphasize the possibilities as well as pitfalls of strategic interactions between individuals, firms and nations in dealing with climate change. This theoretical material will be reinforced through in-class online experiments, where students will actively participate in public goods games and simulations of pollution taxes and permit trading. The outcomes of these games are discussed in class and systematically linked to the underlying theory, enabling students to observe how individual incentives, strategic interaction, and policy design shape collective outcomes and the effectiveness of climate policy interventions.
MAIN TOPICS
- Climate Change: Facts and Figures
- Externalities
- Game Theory
TEACHING METHODOLOGY
The course employs a blended methodology that combines instructor-led theoretical lectures with experiential learning.
DAY-BY-DAY PROGRAM
| N° | Topics | Instructor |
| Lesson 1 |
Facts and figures about the climate change focusing on both the macro (economies) and micro (firms, households, individuals) levels. Conceptualizing climate change as a coordination failure where individuals fail to take into account the external effects of their actions. Identifying the related collective action problems. |
Ceren Soylu & Nick Zubanov |
| Lesson 2 |
Externalities, focusing on environmental, and economic policies of dealing with them |
Nick Zubanov |
| Lesson 3 |
Introduction to Game theory as an analytical tool to understand strategic interactions. Identifying both the causes of Climate Change and failures to achieve a collective solution as a Prisoners’ Dilemma, more specifically a Public Goods game. |
Ceren Soylu |
| Lesson 4 |
Students gain hands-on experience by participating in online games using the ClassEx system Public goods games Pollution taxes and permits |
Ceren Soylu & Nick Zubanov |
SUGGESTED REFERENCES
The Economy 2.0, The CORE Team,Unit 4: Strategic Interactions and Social Dilemmas (available at this link as open access resource)
Experiencing Economics, The CORE Team, Unit 1: Public Goods Game, Unit 3: Pollution, taxes and permits (available at this link as open access resource)