Using Collaborative Bargaining to Develop Environmental Policy when Information is Private
AbstractIn many cases governments invite interest groups to use collaborative bargaining to resolve environmental conflicts. If the parties fail to reach agreement, the government threatens to impose a backstop policy. Bargaining models have predicted that any agreements will be influenced, variously, by self-interest, equity, or entitlement (to the status quo). Although most such models assume that the parties are well informed about one anotherâ€™s utility functions, this assumption conflicts with the reality of negotiations over environmental policy. We develop a laboratory experiment to investigate the impact of private information. Subjects who bargain under this constraint are almost as likely to reach (approximately efficient) agreements as those bargaining under full information. We also find that equity plays a less important role, and entitlement a more important role, under private information than under full information. There is only limited evidence to suggest that parties are drawn to the Nash bargain.
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Bibliographic InfoPaper provided by Department of Economics, University of Calgary in its series Working Papers with number 2011-07.
Date of creation: 11 Mar 2011
Date of revision: 11 Mar 2011
Find related papers by JEL classification:
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-19 (All new papers)
- NEP-CDM-2011-03-19 (Collective Decision-Making)
- NEP-CTA-2011-03-19 (Contract Theory & Applications)
- NEP-ENV-2011-03-19 (Environmental Economics)
- NEP-EXP-2011-03-19 (Experimental Economics)
- NEP-GTH-2011-03-19 (Game Theory)
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