TO NEGOTIATE OR TO GAME THEORIZE: Negotiation vs. Game Theory Outcomes for Water Allocation Problems in the Kat Basin, South Africa

Ariel Dinar, Stefano Farolfi (), Fioravante Patrone and Kate Rowntree

No 60888, Working Papers from University of Pretoria, Department of Agricultural Economics, Extension and Rural Development

Abstract: Common property resource disputes are increasing, due to increase in competition and deterioration of quality. Cooperative arrangements have long been in the center of public interest regarding the mechanisms used by communities that share them. Two main approaches have been applied separately, namely negotiation approaches and cooperative game theory. Although the two approaches depart from different directions and are based on different assumptions, they complement each other as they are based on similar principles of fairness and efficiency and can both be seen as leading to cooperative outcomes. In this paper we apply the Role-Playing Game that is a component of the Companion Modeling approach--a negotiation procedure, and Cooperative Game Theory (Shapley value and the nucleolus) to a water allocation problem in the Kat watershed in South Africa. We use simplifying assumptions to allow a comparable solution. The negotiation and the cooperative game theory provide similar trends vis a vis the various players and their outcomes. Our conclusion is that Cooperative Game Theory and Negotiation approaches may be complementary to each other.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 27
Date: 2006-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:upaewp:60888

DOI: 10.22004/ag.econ.60888

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