Level-of-Aspiration Theory and Initial Stance in Bargaining

This research focuses on the effect of initial stance in bargaining. Following level-of-aspiration theory, the research examines whether the pattern of early concession making modifies the impact of tough vs. soft initial stance. The experiment manipulated opponent\u27s concession pattern (decreasing, constant, increasing) in the early phase of bargaining within an overall tough or soft initial stance. Results indicated that a decreasing concession pattern within the early bargaining extracted larger initial concessions than a constant or increasing concession pattern. Implications for Siegel and Fouraker\u27s (1960) level-of-aspiration theory are discussed

Using Gaussian Processes to Optimise Concession in Complex Negotiations against Unknown Opponents

In multi-issue automated negotiation against unknown opponents, a key part of effective negotiation is the choice of concession strategy. In this paper, we develop a principled concession strategy, based on Gaussian processes predicting the opponent's future behaviour. We then use this to set the agent's concession rate dynamically during a single negotiation session. We analyse the performance of our strategy and show that it outperforms the state-of-the-art negotiating agents from the 2010 Automated Negotiating Agents Competition, in both a tournament setting and in self-play, across a variety of negotiation domains

Concession Length and Investment Timing Flexibility

When assigning a concession contract, the regulator faces the issue of setting the concession length. Another key issue is whether or not the concessionare should be allowed to set the timing of new investments. In this paper we investigate the impact of concession length and investment timing flexibility on the “concession value”. It is generally argued that long-term contracts are privately valuable as they enable a concessionaire to increase her overall discounted returns. Moreover, the real option theory suggests that investment flexibility has an intrinsic value, as it allows concessionaires to avoid costly errors. By combining these two conventional wisdoms, one may argue that long- term contracts, which allow for investment timing flexibility, should always result in higher concession values. Our result suggests that this is not always the case. Firstly, investment flexibility does not always increase the concession value. Secondly, long-term contracts do not necessarily increase the concession value.Concession contracts, Real option theory, Investment timing flexibility, Water utilities

Renegotiation of Concession Contracts in Latin America.

We construct a regulation model in which renegotiation occurs due to the imperfect enforcement of concession contracts. This enables us to provide theoretical predictions for the impact, on the probability of renegotiation of a concession, of regulatory institutions, institutional features, economic shocks and of the characteristics of the concession contracts themselves. Then we use a data set of nearly 1000 concessions awarded in Latin America and the Caribbean countries from 1989 to 2000, covering the sectors of telecommunications, energy, transport and water, to test these predictions. Finally, we derive some policy implications of our theoretical and empirical work.Renegotiation, Concession contracts, Regulation, LDCs.

Efficient Methods for Automated Multi-Issue Negotiation: Negotiating over a Two-Part Tariff

In this article, we consider the novel approach of a seller and customer negotiating bilaterally about a two-part tariff, using autonomous software agents. An advantage of this approach is that win-win opportunities can be generated while keeping the problem of preference elicitation as simple as possible. We develop bargaining strategies that software agents can use to conduct the actual bilateral negotiation on behalf of their owners. We present a decomposition of bargaining strategies into concession strategies and Pareto-efficient-search methods: Concession and Pareto-search strategies focus on the conceding and win-win aspect of bargaining, respectively. An important technical contribution of this article lies in the development of two Pareto-search methods. Computer experiments show, for various concession strategies, that the respective use of these two Pareto-search methods by the two negotiators results in very efficient bargaining outcomes while negotiators concede the amount specified by their concession strategy

FINANCING OF RAILWAY INFRASTRUCTURE IN SLOVENIA

In the paper we present a BOT (Build, Operate, Transfer) model of financing railway infrastructure development in the Republic of Slovenia. It is characteristic of this form of project financing that the host country or a local community grants a private project company or consortium a concession to build and manage the public infrastructure. By signing the concession contract, the concessionaire binds himself/herself to transfer all the property rights from the project back to the grantor at the end of the concession period without additional transaction costs at the end of the concession period.public-private partnerships, project finance, infrastructure, railway, Slovenia.

The impact of private provision of public education : empirical evidence from Bogota's concession schools

In 1999 the city of Bogota, Colombia launched the concession school program designed to broaden the coverage and quality of basic education. It consists of a contract between a group of private schools and the public educational system such that private agents provide education for low-income students. This paper tests three main hypotheses concerning the impact of concessions on the quality of education: first, dropout rates are lower in concession schools than in similar public schools; second, other public schools nearby the concession schools have lower dropout rates in comparison with other public schools outside the area of influence; and third, test scores from concession schools are higher than scores in similar public schools. The paper presents evidence in favor of the three hypotheses using propensity score and matching estimators.Tertiary Education,Education For All,Secondary Education,Primary Education,Teaching and Learning,Economics of Education

Road infrastructure concession practice in Europe

In a road infrastructure concession, a public authority grants specific rights to a private, or semi-public company to construct, overhaul, maintain, and operate infrastructure for a given period. By contract, the public authority charges that company with making the investments needed to create the service at its own cost, and to operate it at its own risk. The price paid to the company comes from the service's users, the public authority, or both. In 1999, out of roughly 51,000 kilometers of European motorways, about 17,000 kilometers (33 percent) were concessioned - 16,400 kilometers by toll, and 670 kilometers by shadow toll (design, build, finance, and operate arrangements). Of these, 73 percent are managed by the public sector, and 27 percent by private companies. State-owned companies have been important in European motorway concessions. Systems vary among countries, for example, in how they share risks between the concession authority, and the concession company. As the motorway network has grown denser, attributing commercial risk has become more difficult. Increasingly, public authorities must play a greater regulatory role. Already, bad experiences have made the private sector reluctant to bear the commercial risk. Ant the commercial risk is sometimes too great to be carried by the concession company alone. Commercial risk should be controlled by mechanisms incorporated in the contract, but control of the commercial risk must not eliminate incentives. In addition to safeguarding the community's interests, the public concession authority, must increase citizen awareness about concession decisions, to ensure their social acceptability. Formulas for determining toll charges, differ through Europe. So do criteria for selecting concession companies. In 1999, the main criteria used were these: 1) the amount of public subsidy required; 2) the credibility of the financial arrangements; 3) the project's technical quality; 4) the operating strategy, and price policy; and, 5) the reputation of the concession company (whether it has a construction company among its shareholders, for example). The increasingly frequent use of private funding, must be taken into account when defining the training required by personnel responsible for monitoring the concessions.Information Technology,Roads&Highways,Economic Adjustment and Lending,Banks&Banking Reform,Public Sector Economics&Finance,Roads&Highways,Toll Roads,Economic Adjustment and Lending,Airports and Air Services,Public Sector Economics&Finance

Externalities and Compensation: Primeval Games and Solutions

The classical literature (Pigou (1920), Coase (1960), Arrow (1970)) and the relatively recent studies (cf.Varian (1994)) associate the externality problem with efficiency.This paper focuses explicitly on the compensation problem in the context of externalities.To capture the features of inter-individual externalities, this paper constructs a new game-theoretic framework: primeval games.These games are used to design normative compensation rules for the underlying compensation problems: the marginalistic rule, the concession rule, and the primeval rule.Characterizations of the marginalistic rule and the concession rule are provided and specific properties of the primeval rule are studied.externality;compensation;primeval games;marginalistic rule;concession rule;primeval rule

Bidding for concessions

Privatization of infrastructure ventures in sectors such as energy, telecommunication, transport, and water has become popular over the last decade. Often- for good or bad reasons - private firms are given monopoly franchises under some type of long-term concession agreement, for example"Build-Operate-Transfer"schemes. The article surveys the issues arising in designing specifications as well as incentive and risk-sharing parameters comprehensively and consistently both to achieve efficient performance by the concessionaire and to minimize post-award renegotiations. Concession award should as a rule be made competitively, unless special requirements of speed, innovation, or excessive transaction cost argue otherwise. Typically, competitive concession award is made by first price sealed bids. There are strong arguments, however, to consider open auctions more seriously in a number of cases. Auctions may also be re-awarded by way of auction. However, somewhat arbitrary bid preferences may have to be set. Auctioneers for complex concession contracts should operate at arms-length from all interested parties, including politicians. It may be sensible to let independent agencies that regulate the concession scheme run the auction.Decentralization,Environmental Economics&Policies,Markets and Market Access,International Terrorism&Counterterrorism,Economic Theory&Research,International Terrorism&Counterterrorism,Environmental Economics&Policies,Access to Markets,Markets and Market Access,Economic Theory&Research