Systematic uncertainty in self-enforcing international environmental agreements

This paper addresses the subject of self-enforcing international environmental agreements (IEAs). The standard model of IEAs is adapted to include uncertainty in environmental costs and benefits, as well as learning about these costs and benefits. The paper investigates the extent to which the size of the coalition changes as a result of learning and systematic uncertainty (also known as model uncertainty). Results are that systematic uncertainty by itself decreases the size of an IEA. Learning has the further effect of either increasing or decreasing the size of an IEA, depending on parameters of the problem.