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Water overvaluation in incentivized bargaining games

Author

Listed:
  • Margarita Gáfaro
  • César Mantilla

Abstract

The design of mechanisms for sustainable irrigation water management requires a deep understanding of the value of water to local communities. We present results from a lab-in-the-field incentivized game that sheds light on irrigation water overvaluation patterns among small farmers in Colombia. In this game, two players divide a jointly endowed agricultural land plot, with some pieces having direct access to irrigation water. Although the induced cost of irrigation water in our game was one token, farmers paid between 2.1 and 3.5 times this amount. We generalize this result by presenting a general bargaining game that can be used to identify overvaluation in settings contexts where relevant use conflicts arise. **** RESUMEN: El diseño de mecanismos para la gestión sostenible del agua de riego requiere una comprensión profunda del valor del agua para las comunidades locales. En este trabajo presentamos los resultados de un juego incentivado de laboratorio en el campo que muestra patrones de sobrevaloración del agua de riego entre pequeños agricultores Colombia. En este juego dos participantes se dividen un terreno agrícola, heredado conjuntamente, en el que algunas parcelas tienen acceso directo al agua de riego. Aunque el costo inducido del agua en nuestro juego es de una ficha, los jugadores pagaron entre 2,1 y 3,5 veces esta cantidad. Proponemos un modelo de negociación que explica este resultado y que puede utilizarse para identificar sobrevaloración en entornos con conflictos de uso relevantes.

Suggested Citation

  • Margarita Gáfaro & César Mantilla, 2024. "Water overvaluation in incentivized bargaining games," Borradores de Economia 1293, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:1293
    DOI: 10.32468/be.1293
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    References listed on IDEAS

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    More about this item

    Keywords

    lab-in-the-field experiment; cooperative bargaining; irrigation water; non-cooperative bargaining; Nash bargaining; experimento de laboratorio en campo; negociación cooperativa; agua de riego; negociación no cooperativa; negociación de Nash;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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