Modelling Negotiated Decision Making: a Multilateral, Multiple Issues, Non-Cooperative Bargaining Model with Uncertainty

The relevance of bargaining to everyday life can easily be ascertained, yet the study of any bargaining process is extremely hard, involving a multiplicity of questions and complex issues. The objective of this paper is to provide new insights on some dimensions of the bargaining process – asymmetries and uncertainties in particular – by using a non-cooperative game theory approach. We develop a computational model which simulates the process of negotiation among more than two players, who bargain over the sharing of more than one pie. Through numerically simulating several multiple issues negotiation games among multiple players, we identify the main features of players’ optimal strategies and equilibrium agreements. As in most economic situations, uncertainty crucially affects also bargaining processes. Therefore, in our analysis, we introduce uncertainty over the size of the pies to be shared and assess the impacts on players’ strategic behaviour. Our results confirm that uncertainty crucially affects players’ behaviour and modifies the likelihood of a self-enforcing agreement to emerge. The model proposed here can have several applications, in particular in the field of natural resource management, where conflicts over how to share a resource of a finite size are increasing.Bargaining, Non-Cooperative Game Theory, Simulation Models, Uncertainty

A Stochastic Multiple Players Multi-Issues Bargaining Model for the Piave River Basin

The objective of this paper is to investigate the usefulness of non-cooperative bargaining theory for the analysis of negotiations on water allocation and management. We explore the impacts of different economic incentives, a stochastic environment and varying individual preferences on players’ strategies and equilibrium outcomes through numerical simulations of a multilateral, multiple issues, non-cooperative bargaining model of water allocation in the Piave River Basin, in the North East of Italy. Players negotiate in an alternating-offer manner over the sharing of water resources (quantity and quality). Exogenous uncertainty over the size of the negotiated amount of water is introduced to capture the fact that water availability is not known with certainty to negotiating players. We construct the players’ objective function with their direct input. We then test the applicability of our multiple players, multi-issues, stochastic framework to a specific water allocation problem and conduct comparative static analyses to assess sources of bargaining power. Finally, we explore the implications of different attitudes and beliefs over water availability.bargaining, non-cooperative game theory, simulation models, uncertainty

Governance and Water Management: Progress and Tools in Mediterranean Countries

This paper reviews the progress with respect to Integrated Water Resource Management (IWRM) in Mediterranean countries, as addressed within the activities of the Nostrum-Dss project, a Coordination Action funded by the 6th Framework Programme of the EC, with a particular emphasis on the current use of decision support tools (DSS). The IWRM paradigm is a comprehensive management framework, which integrates the different aspects of water resources – from the underlying ecological and physical aspects, to the socio-economic values and needs (horizontal integration); and calls for increasing decentralisation and privatisation of water services (vertical integration), and the devolution of planning authority, without however forgetting the need to ensure equitable access to water resources. Substantial progress has been made in the last decades in Nostrum-Dss Partner countries, although a disparity can still be seen between the Northern and Southern banks. New institutions have been established for implementing IWRM, existing institutions have been reformed, and decision making processes increasingly require public participation. Decentralisation of decision making, implementation and monitoring are also well underway, although improvements are still needed to ensure that the traditional power structures do not prevail. More efficient technologies and infrastructures are in place, especially for the production of high value goods or in agriculture. Finally, several DSS have been developed: yet, while operational/technical DSS instruments have been successfully employed, DSSs tools developed in a participatory way, or tackling more complex, political as well as environmental and economic problems are still de-linked from actual decision making processes. Laws and regulations for water management in most Mediterranean countries embrace and support the paradigms of IWRM – and EU framework directives have played an important role in fostering this shift from more traditional, vertical governance to new, horizontal governance based on soft laws. Yet, the implementation of such laws and regulations is often only partial – often because of the lack of a clear monitoring and enforcement strategy, but also because of governments’ financial and human resources constraints. Strong overlaps of roles and competences among different government institutions remain, hampering effective implementation of water management. The tendency to centralisation of decision making persists, and actors’ involvement is scanty. The shift towards the use of demand side policies as opposed to supply side policies is not yet completed: yet, supply side policies are very costly, as they are based on greater mobilisation of financial resources. Full cost recovery pricing is not practiced widely. This reluctance to introduce full cost recovery pricing in developing countries may be due to ethical and moral considerations, but in developed countries it is often associated with strong lobbying power of interest groups. This study was supported by funding under the Sixth Research Framework of the European Union within the project "Network on Governance, Science and Technology for Sustainable Water Resource Management in the Mediterranean- The role of Dss tools” (NOSTRUM-Dss, contract number INCO-CT-2004-509158).Integrated Water Resources Management, Decision Support Systems, Environmental Governance

A stochastic multiple players multi-issues bargaining model for the Piave river basin

The objective of this paper is to investigate the usefulness of non-cooperative bargaining theory for the analysis of negotiations on water allocation and management. We explore the impacts of different economic incentives, a stochastic environment and varying individual preferences on players’ strategies and equilibrium outcomes through numerical simulations of a multilateral, multiple issues, non-cooperative bargaining model of water allocation in the Piave River Basin, in the North East of Italy. Players negotiate in an alternating-offer manner over the sharing of water resources (quantity and quality). Exogenous uncertainty over the size of the negotiated amount of water is introduced to capture the fact that water availability is not known with certainty to negotiating players. We construct the players’ objective function with their direct input. We then test the applicability of our multiple players, multi-issues, stochastic framework to a specific water allocation problem and conduct comparative static analyses to assess sources of bargaining power. Finally, we explore the implications of different attitudes and beliefs over water availability.Bargaining, non-cooperative game theory, simulation models, uncertainty

Climate Change Impacts and Adaptation Strategies In Italy. An Economic Assessment

In this paper, the economic value of the impacts of climate change is assessed for different Italian economic sectors and regions. Sectoral and regional impacts are then aggregated to provide a macroeconomic estimate of variations in GDP induced by climate change in the next decades. Autonomous adaptation induced by changes in relative prices and in stocks of natural and economic resources is fully taken into account. The model also considers international trade effects. Results show that in Italy aggregate GDP losses induced by climate change are likely to be small. However, some economic sectors (e.g. tourism) and the alpine regions will suffer significant economic damages.Impacts, Climate Change, Adaptation, GDP Losses, Tourism

Modelling Negotiated Decision Making: a Multilateral, Multiple Issues, Non-Cooperative Bargaining Model with Uncertainty

The relevance of bargaining to everyday life can easily be ascertained, yet the study of any bargaining process is extremely hard, involving a multiplicity of questions and complex issues. The objective of this paper is to provide new insights on some dimensions of the bargaining process – asymmetries and uncertainties in particular – by using a non-cooperative game theory approach. We develop a computational model which simulates the process of negotiation among more than two players, who bargain over the sharing of more than one pie. Through numerically simulating several multiple issues negotiation games among multiple players, we identify the main features of players’ optimal strategies and equilibrium agreements. As in most economic situations, uncertainty crucially affects also bargaining processes. Therefore, in our analysis, we introduce uncertainty over the size of the pies to be shared and assess the impacts on players’ strategic behaviour. Our results confirm that uncertainty crucially affects players’ behaviour and modify the likelihood of a self-enforcing agreement to emerge. The model proposed here can have several applications, in particular in the field of natural resource management, where conflicts over how to share a resource of a finite size are increasing.bargaining, non-cooperative game theory, simulation models, uncertainty

A Stochastic Multiple Players Multi-Issues Bargaining Model for the Piave River Basin

The objective of this paper is to investigate the usefulness of non-cooperative bargaining theory for the analysis of negotiations on water allocation and management. We explore the impacts of different economic incentives, a stochastic environment and varying individual preferences on players’ strategies and equilibrium outcomes through numerical simulations of a multilateral, multiple issues, non-cooperative bargaining model of water allocation in the Piave River Basin, in the North East of Italy. Players negotiate in an alternating-offer manner over the sharing of water resources (quantity and quality). Exogenous uncertainty over the size of the negotiated amount of water is introduced to capture the fact that water availability is not known with certainty to negotiating players. We construct the players’ objective function with their direct input. We then test the applicability of our multiple players, multi-issues, stochastic framework to a specific water allocation problem and conduct comparative static analyses to assess sources of bargaining power. Finally, we explore the implications of different attitudes and beliefs over water availability.Bargaining, Non-Cooperative Game Theory, Simulation Models, Uncertainty

Advances in negotiation theory : bargaining, coalitions, and fairness

Bargaining is ubiquitous in real life. It is a major dimension of political and business activities. It appears at the international level, when governments negotiate on matters ranging from economic issues (such as the removal of trade barriers), to global security (such as fighting against terrorism) to environmental and related issues (such as climate change control). What factors determinethe outcomes of such negotiations? What strategies can help reach an agreement? How should the parties involved divide the gains from cooperation? With whom will one make alliances? The authors address these questions by focusing on a noncooperative approach to negotiations, which is particularly relevant for the study of international negotiations. By reviewing noncooperative bargaining theory, noncooperative coalition theory, and the theory of fair division, they try to identify the connections among these different facets of the same problem in an attempt to facilitate progress toward a unified framework.Economic Theory&Research,Social Protections&Assistance,Environmental Economics&Policies,Scientific Research&Science Parks,Science Education

Applications of negotiation theory to water issues

The authors review the applications of noncooperative bargaining theory to waterrelated issues-which fall in the category of formal models of negotiation. They aim to identify the conditions under which agreements are likely to emerge and their characteristics, to support policymakers in devising the"rules of the game"that could help obtain a desired result. Despite the fact that allocation of natural resources, especially trans-boundary allocation, has all the characteristics of a negotiation problem, there are not many applications of formal negotiation theory to the issue. Therefore, the authors first discuss the noncooperative bargaining models applied to water allocation problems found in the literature. Key findings include the important role noncooperative negotiations can play in cases where binding agreements cannot be signed; the value added of politically and socially acceptable compromises; and the need for a negotiated model that considers incomplete information over the negotiated resource.Water Supply and Sanitation Governance and Institutions,Town Water Supply and Sanitation,Water and Industry,Environmental Economics&Policies,Water Conservation

Advances in Negotiation Theory: Bargaining, Coalitions and Fairness

Bargaining is ubiquitous in real-life. It is a major dimension of political and business activities. It appears at the international level, when governments negotiate on matters ranging from economic issues (such as the removal of trade barriers), to global security (such as fighting against terrorism) to environmental and related issues (e.g. climate change control). What factors determine the outcome of negotiations such as those mentioned above? What strategies can help reach an agreement? How should the parties involved divide the gains from cooperation? With whom will one make alliances? This paper addresses these questions by focusing on a non-cooperative approach to negotiations, which is particularly relevant for the study of international negotiations. By reviewing non-cooperative bargaining theory, non-cooperative coalition theory, and the theory of fair division, this paper will try to identify the connection among these different facets of the same problem in an attempt to facilitate the progress towards a unified framework.Negotiation theory, Bargaining, Coalitions, Fairness, Agreements