Games in the Arctic: applying game theory insights to Arctic challenges

Abstract

We illustrate the benefits of game theoretic analysis for assisting decision-makers in resolving conflicts and other challenges in a rapidly evolving region. We review a series of salient Arctic issues with global implications—managing open-access fisheries, opening Arctic areas for resource extraction and ensuring effective environmental regulation for natural resource extraction—and provide insights to help reach socially preferred outcomes. We provide an overview of game theoretic analysis in layman's terms, explaining how game theory can help researchers and decision-makers to better understand conflicts, and how to identify the need for, and improve the design of, policy interventions. We believe that game theoretic tools are particularly useful in a region with a diverse set of players ranging from countries to firms to individuals. We argue that the Arctic Council should take a more active governing role in the region by, for example, dispersing information to “players” in order to alleviate conflicts regarding the management of common-pool resources such as open-access fisheries and natural resource extraction. We also identify side payments—that is, monetary or in-kind compensation from one party of a conflict to another—as a key mechanism for reaching a more biologically, culturally and economically sustainable Arctic future. By emphasizing the practical insights generated from an academic discipline, we present game theory as an influential tool in shaping the future of the Arctic—for individual researchers, for inter-disciplinary research and for policy-makers themselves.

• Arctic futures
• Arctic games
• environmental regulation
• resource contests
• side payments
• effective governance

Acknowledgements

This paper was completed as part of the Arctic Games research project, within the Swedish Arctic Futures in a Global Context research programme, funded by the Foundation for Strategic Environmental Research and hosted by the Swedish Polar Research Secretariat. In addition to two anonymous reviewers, we thank all the participants of the Arctic Games project including EnviroEconomics Sweden Consultancy, the Centre for Economic and Financial Research (Russia), the New Economic School (Russia), the Northern Research Institute (Norway), the Royal Institute of Technology (Sweden), the University of Stockholm and the University of Nordland (Norway).