Human-Agent Decision-making: Combining Theory and Practice

Extensive work has been conducted both in game theory and logic to model strategic interaction. An important question is whether we can use these theories to design agents for interacting with people? On the one hand, they provide a formal design specification for agent strategies. On the other hand, people do not necessarily adhere to playing in accordance with these strategies, and their behavior is affected by a multitude of social and psychological factors. In this paper we will consider the question of whether strategies implied by theories of strategic behavior can be used by automated agents that interact proficiently with people. We will focus on automated agents that we built that need to interact with people in two negotiation settings: bargaining and deliberation. For bargaining we will study game-theory based equilibrium agents and for argumentation we will discuss logic-based argumentation theory. We will also consider security games and persuasion games and will discuss the benefits of using equilibrium based agents.Comment: In Proceedings TARK 2015, arXiv:1606.0729

North-South Climate Change Negotiations: a Sequential Game with Asymmetric Information

This article determines the conditions under which the Southern countries should act together, or separately, while negotiating with the North about climate change policy and about the conditions for future Southern engagement. The paper models the international negotiations with complete and with asymmetric information in a dynamic framework. Results show that, depending on their characteristics, the different players can obtain benefits delaying the moment of the agreement.Bargaining theory, asymmetric information, climate change, international cooperation

How does the design of international environmental agreements affect investment in environmentally friendly technologies ?

This paper studies the link between the design of international environmental agreements and the incentives for the private sector to invest in cleaner technologies. More specifically, it compares the performance, in the Paretoo sense, of two types of agreement : an agreement on a uniform standard with transfers and an agreement on differentiated standards without transfers. To achieve this goal, we use a multi-stage game where the private sector anticipates its irreversible investment given the expected level of abatement standards, resulting from future bilateral negotiations. Our findings indicate that whenever countries are able to partially commit, the agreement on a uniform standard may be preferable, as it creates greater incentives for firms to invest in costly abatement technology. This result relies on the low level of the set-up cost of this technology. If this level is sufficiently high, the announcement and implementation of the agreement on a uniform standard with transfers is not optimal, because it takes away the incentive of all firms to invest in a new abatement technology.agreements, standards, transfers, technology adoption, irreversible investment, bargaining, transboundary pollution.

Emissions Trading Regimes and Incentives to Participate in International Climate Agreements

This paper analyses whether different emissions trading regimes provide different incentives to participate in a cooperative climate agreement. Different incentive structures are discussed for those countries, namely the US, Russia and China, that are most important in the climate negotiation process. Our analysis confirms the conjecture that, by appropriately designing the emission trading regime, it is possible to enhance the incentives to participate in a climate agreement. Therefore, participation and optimal policy should be jointly analysed. Moreover, our results show that the US, Russia and China have different most preferred climate coalitions and therefore adopt conflicting negotiation strategies.Agreements, Climate, Incentives, Negotiations, Policy

International Environmental Agreements: Incentive Contracts with Multilateral Externalities

We consider how one party can induce another party to join an inter- national emission compact given private information. Due to multilateral externalities the principal uses her own emissions besides subsidies to in- centivize the agent. This leads to a number of non-standard features: Optimal contracts can include a boundary part, which is not a copy of the no contract outcome. Compared to this, a contract can increase emis- sions of the principal for ine¢ cient types, and reduce his payo¤ for e¢ cient types. Subsidies can be constant or even decreasing and turn negative, i.e., the agent reduces emissions and pays the principal.private information, multilateral externalities, mecha- nism design, restricted contracts, environmental agreements

Free Trade Networks

The paper examines the formation of free trade agreements (FTAs) as a network formation game. We consider a general n-country model in which countries trade differentiated industrial commodities as well as a numeraire good. Countries may be different in the size of the industrial good industry (measure of firms) and the market size (population size). Their incentives to sign an FTA depend on these characteristics of their own countries and those of their partner countries. We show that if all countries are symmetric, a complete global free trade network is pairwise stable and it is the unique stable network if industrial commodities are not highly substitutable. We also compare FTAs and customs unions (CUs) as to which of these two regimes facilitate global trade liberalization, emphasizing the fact that unlike in the case of a CU, each country signing an FTA can have a new FTA with an outside country without consent of other member countries.Free trade agreement, Customs union, Global free trade, Theory of network, Pairwise stability