Altruistic behavior and International Environmental Agreements

In the last three decades International Environmental Agreements (IEAs) has been widely analyzed. Classical models predict that only coalitions formed by few countries can be stable, generating a rich literature devoted to solve the small coalition puzzle. The fundamental idea behind the great part of the literature is that players are selfish: to achieve a large stable coalition it is necessary to design an agreement that include a credible system of incentives or punishment. The aim of this model is to study the effects on equilibrium strategies and on the stability of an IEA when players do not look at their on interests only, but they take care of the wellness of the other players in coalition. Following the approach of the Paris Agreement in 2015, countries that join the coalition do not decide the emission collectively, but each country sets its own emission. The model is the usual two-step game: first the players has to choose if they want to join the coalition or not, in the second step they solve a Nash differential game to find the optimal emissions. The stability of the coalition is studied in two cases: i) with the classic internal and external stability, ii) defining an altruistic stability condition.