Sober optimism and the formation of international environmental agreements

We analyze a dynamic model of international environmental agreements where countries cannot make long-term commitments or use sanctions rewards to induce cooperation. The equilibrium is Markov chain, not particular coalition. A large and effective coalition an absorbing state, reached after random succession short-lived ineffective coalitions. Reaching such requires that the endogenous probability “success” in any negotiating round neither too small nor large, circumstance we describe as “sober optimism”: understanding cooperation possible but easy achieve. An empirical application illustrates importance sober optimism creating climate agreement.