Credit for this goes to the economist Richard Thaler, who mentioned the game’s basic premise in a Freakonomics Radio podcast.
I created this game for an admissions office event designed to persuade admitted applicants — high school students — to enroll. There were eight participants in the room. I placed a folded paper placard with the name of a country on it in front of each participant. The countries had varying GDP levels; e.g., El Salvador and China. I used poker chips instead of real money. I introduced the game by asking the group if they thought it was important for all countries to work toward mitigating climate change; everyone agreed. I then announced that we would simulate an international fund for climate defense. Countries could contribute to the fund that would be used to slow climate change and benefit everyone.
The game unfolds in three phases. Since my time was limited to about 35 minutes, I did two rounds for each phase. Probably more rounds per phase would work better. Here are the game’s rules:
Phase 1: Each player begins the game with 5 chips. For each round, a player can contribute 0 to 5 chips to the fund. At the end of the round, the number of chips in the fund doubles and this amount is divided equally among all players.
Phase 2: Players retain any chips acquired in Phase 1. Rules from Phase 1 still apply, plus: You can spend 1 chip to penalize another country. The country that is penalized loses 2 chips. To do this, write the name of the country on a piece of paper and give it to me along with 1 of your chips.
Phase 3: Each player starts with an amount of chips that reflects his or her country’s GDP. All other rules from Phases 1 and 2 still apply.
After six rounds, I led a short discussion, and it was evident that the high school students had picked up on the collective action problem that exists in the provision of international public goods.