Mathematical models of bargaining games can suggest strategies and even equilibria, but they do not necessarily predict actual outcomes. To explore the relationship of theoretical and applied models of bargaining, we will consider feedback approaches that begin with theory, test theory under experimental conditions (where participants negotiate in conditions under incentives present in the theory), and update theory to reflect deviations between predicted and theoretical results. Such approaches are more-likely to produce robust designs for mechanisms to address climate change that can be utilized in the 2009 Kyoto negotiations. Market mechanisms have been touted by many economists as the most efficient process to reduce externalities such as greenhouse gas emissions. The European Union has implemented such a mechanism known as the EU Emissions Trading Scheme (ETS). However, the EU ETS has been criticized in the public press and in congressional hearings for the failure of the implementation of its first phase. Indeed, it has demonstrated the possible shortcomings of cap-and-trade schemes: missing the emissions reduction targets, collapse of allowance prices and significant (some will even say obscene) windfall profits for the energy companies involved. Since most countries are contemplating mandatory cap-and-trade schemes to address CO2 emissions (e.g. Japan, Canada, Australia, New Zealand and the next president of the US has a cap-and-trade scheme on his energy/environmental platform) it is of the utmost importance to understand the economic consequences of the design of a cap-and-trade scheme. The workshop will bring together economists, policy makers, mathematicians, and industrial leaders to address these issues in a rigorous scientific manner. Accommodations: A block of rooms has been reserved at the Rose Garden Inn. Reservations may be made by calling 1-800-992-9005 OR directly on their website. Click on Corporate at the bottom of the screen and when prompted enter code MATH (this code is not case sensitive). By using this code a new calendar will appear and will show MSRI rate on all room types available. The cut-off date for reservations is April 17, 2009. A block of rooms has been reserved at the Hotel Durant. Please mention the workshop name and reference the following code when making reservations via phone, fax or e-mail ONLY: 0905ECONOM. The cut-off date for reservations is April 3, 2009. Room Rate $139/ night.