Strategic Behavior and the Environment > Vol 1 > Issue 2

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

Alessandra Sgobbi, Fondazione Eni Enrico Mattei, Italy, , Carlo Carraro, Fondazione Eni Enrico Mattei, Università Ca' Foscari Venezia and CMCC,
Suggested Citation
Alessandra Sgobbi and Carlo Carraro (2011), "A Stochastic Multiple Players Multi-Issues Bargaining Model for the Piave River Basin", Strategic Behavior and the Environment: Vol. 1: No. 2, pp 119-150.

Publication Date: 05 Apr 2011
© 2011 A. Sgobbi and C. Carraro
Game Theoretic Models/Cooperation/Noncooperation,  Group Choice and Negotiation/Bargaining,  Uncertainty
BargainingNon-cooperative game theorySimulation modelsUncertainty


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In this article:
The Bargaining Framework 
The Piave River Basin and the Structure of the Game 
Negotiated Water Management in the Piave River Basin 
Conclusions and Policy Implications 


This paper investigates the usefulness of non-cooperative bargaining theory for the analysis of negotiations on water allocation and management. It explores the impacts of different economic incentives, of a stochastic environment and of varying individual preferences on players' strategies and equilibrium outcomes. The analysis is based on numerical simulations of a multilateral, multiple issues, non-cooperative bargaining model of water allocation in the Piave River Basin, located in the North East of Italy. Players negotiate in an alternating offer manner over the sharing of water resources. 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. The applicability of our multiple players, multi-issues, stochastic framework is tested through several comparative statics exercises designed to assess the influence of different sources of bargaining power. Finally, the implications of different attitudes and beliefs over water availability are explored.