On the Self-serving Use of Equity Principles in International Climate Negotiations

This paper puts forward equity as an important structural element to understanding negotiation outcomes. We first advance bargaining theory to incorporate the self-serving use of equity. Agents are predicted to push equity principles which benefit them more than other parties, in particular those which are disadvantageous to parties with large bargaining power. Based on unique data from a world-wide survey of agents involved in international climate policy, we then study how participants assess the support of the equity criteria by major parties in the climate negotiations. Comparing these results with cost estimates from a POLES model, we find that the perceived equity preferences of the respective countries or groups of countries are in general consistent with our hypothesis of a self-serving use of equity criteria and thereby lend support for our theoretical model. While this self-interest is recognized by the participants of our survey for the positions of the USA and the G77/China as well as Russia, the EU manages to be seen as choosing (self-serving) equity arguments out of fairness concerns and in order to facilitate the negotiations. --bargaining theory,equity criteria,self-serving bias,climate policy,survey data

The Art of Compromise

Policy is modeled as the outcome of negotiations between two three-party parliamentary states. An election in jurisdiction A determines the composition of the legislature that selects a representative to negotiate an intergovernmental policy agreement with the representative from the legislature of jurisdiction B. Negotiations are modeled using Nash’s (1950) bargaining framework, modified to account for a simultaneous legislative ratification vote. Though agreements favor the legislative representative least willing to compromise, agreements between the bargainers may not follow the ordering of the parties’ ideal policies. An electoral outcome where support for the center party comes from extreme voters may emerge.Vote balancing; intergovernmental bargaining; legislative ratification; willingness to compromise

Nonparametric analysis of household labour supply: Goodness-of-fit and power of the unitary and the collective model.

We compare the empirical performance of the unitary and the collective approach to modelling observed labour supply behaviour. Deviating from the mainstream literature, we conduct a nonparametric analysis, which avoids the distortive impact of an erroneously specified functional form for the preferences and/or the intrahousehold bargaining process. Our analysis specifically focuses on the goodness-of-fit of the two behavioural models. To guarantee a fair comparison, we complement this goodness-of-fit analysis with a power analysis. Our results strongly favour the collective approach to modelling the behaviour of multi-person households. More generally, they illustrate the usefulness of nonparametric testing tools for the empirical evaluation of theoretical behavioural models.Goodness of fit; Model; Power;

On the Self-serving Use of Equity Principles in International Climate Negotiations

This paper puts forward equity as an important structural element to understanding negotiation outcomes. We first advance bargaining theory to incorporate the self-serving use of equity. Agents are predicted to push equity principles which benefit them more than other parties, in particular those which are disadvantageous to parties with large bargaining power. Based on unique data from a world-wide survey of agents involved in international climate policy, we then study how participants assess the support of the equity criteria by major parties in the climate negotiations. Comparing these results with cost estimates from a POLES model, we find that the perceived equity preferences of the respective countries or groups of countries are in general consistent with our hypothesis of a self-serving use of equity criteria and thereby lend support for our theoretical model. While this self-interest is recognized by the participants of our survey for the positions of the USA and the G77/China as well as Russia, the EU manages to be seen as choosing (self-serving) equity arguments out of fairness concerns and in order to facilitate the negotiations

On the Ranking of Bilateral Bargaining Opponents

We fix the status quo (Q) and one of the bilateral bargaining agents to examine how shifting the opponent.s ideal point (type) away from Q in a unidimensional space affects the Nash and Kalai-Smorodinsky bargaining solutions when opponents differ only in their ideal points. The results are similar for both solutions. As anticipated, the bargainer whose ideal point is farthest from Q prefers a opponent whose ideal is closest to her own. A similar intuitive ranking emerges for the player closest to Q when opponent\'s preferences exhibit increasing absolute risk aversion. However, if the opponent\'s preferences exhibit decreasing absolute risk aversion (DARA), the player closest to Q prefers a more extreme opponent. This unintuitive result arises for opponents with DARA preferences because the farther their ideal point is from Q, the easier they are to satisfy.Game Theory; Nash bargaining problems; bargaining solutions, rankings

An Integrated Multi-Criteria System to Assess Sustainable Energy Options: An Application of the Promethee Method

The planning and appraisal of sustainable energy projects involve rather complex tasks. This is due to the fact that the decision making process is the closing link in the process of analysing and handling different types of information: environmental, technical economic and social. Such information can play a strategic role in steering the decision maker towards one choice instead of another. Some of these variables (technical and economic) can be handled fairly easily by numerical models whilst others, particularly ones relating to environmental impacts, may only be adjudicated qualitatively (subjective or not). In many cases therefore, traditional evaluation methods such as cost-benefit analysis and the main economic and financial indicators (NPV, ROI, IRR etc.) are unable to deal with all the components involved in an environmentally valid energy project. Multi-criteria methods provide a flexible tool that is able to handle and bring together a wide range of variables appraised in different ways and thus offer valid assistance to the decision maker in mapping out the problem. This paper sets out the application of a multi-criteria method (PROMETHEE developed by J.P. Brans et al. 1986) to a real life case that is in tune with the objectives of sustainable development.Renewable energy, Multicriteria, Sustainable devolopment

The Constitution of the Nonprofit Enterprise: Ideals, Conformism and Reciprocity

We provide an account of the non profit enterprise based on the motivations of the agents involved. Our main idea is that these are ex -post motivated by both self-interest and a conditional willingness to conform to their ex ante accepted constitutional ideology, which are weighed up in a comprehensive utility function. Ideology is shaped as the result of a hypothetical ‘social' contract between the relevant figures participating in the venture, in particular an entrepreneur, a worker, and a consumer who acts as a dummy beneficiary in the ex-post stage. It can thus be defined as a normative principle of fairness that boils down to a distributive social welfare function defined over the outcomes of a game, which permits to order them according to their conformity to the constitutional ideology. For conformist preferences depend upon expectations of reciprocal conformity to a normative principle, defined on social states described in as much they conform to an ideal, then the agents' model of choice asks for the adoption of the psychological games approach, where payoff functions range over not only the players' strategies but also their beliefs. If the conformist prompt to action is sufficiently strong then the outcome in which both the active agents perform an action improving the quality of the good with respect to the free market standard, thus maximising the surplus of the consumers, results in a psychological Nash equilibrium of the game. We associate this outcome, and the corresponding norm of behaviour, with the constitution of the non profit enterprise. We also show that the structure of the interaction is a coordination game, thus calling for the necessity of devices such as codes of ethics to solve the coordination problem. Keywords: Nonprofit, non-self-interested motivations, conformism, reciprocity, ideology.

The effective number of relevant parties : how voting power improves Laakso-Taagepera’s index

This paper proposes a new method to evaluate the number of rel- evant parties in an assembly. The most widespread indicator of frag- mentation used in comparative politics is the ‘Effective Number of Par- ties’(ENP), designed by Laakso and Taagepera (1979). Taking both the number of parties and their relative weights into account, the ENP is arguably a good parsimonious operationalization of the number of ‘relevant’ parties. This index however produces misleading results in single-party ma jority situations as it still indicates that more than one party is relevant in terms of government formation. We propose to modify the ENP formula by replacing proportions of seats by voting power measures. This improved index behaves more in line with Sar- tori’s definition of relevance, without requiring additional information in its construction.Voting power indices; Effective Number of Parties; Party system fragmentation; Relevance; Coalition Formation