Environmental negotiations: The problem of time-inconsistent strategies

The paper compares the approaches to the question of governmental strategy’s credibility over time, one based upon the standard economic formulation and the other, proposed by the author, based upon ‘soft’ game theoretic approach. The paper indicates that the standard control theoretic formulation used in economies does not correspond to the situation at hand and suggests that a ‘softened’ game theoretic approach might be the right response. It is mainly assumed that not all the strategic properties of the normal-form strategy should be retained throughout strategy implementation. The paper thus becomes an interesting discussion of the meta-level considerations concerning game theory and optimization.