Bargaining Under Uncertainty: A Monte-Carlo Fallback Bargaining Method for Predicting the Likely Outcomes of Environmental Conflicts

Abstract

This chapter develops a method for analyzing bargaining problems in which the bargainers are uncertain about the performance of alternative bargaining outcomes. Monte-Carlo selection is combined with fallback bargaining (FB) in order to map the stochastic bargaining problem into many deterministic bargaining problems which can be analyzed using various fallback bargaining methods, namely unanimity FB, q-approval FB, and FB with impasse. The proposed method is applied to the California’s Sacramento-San Joaquin Delta benchmark problem. In this problem the stakeholders need to reach an agreement over a water export strategy to address the current crisis in the Delta. This problem is modeled here as a bargaining game in which the environmentalists and water exporters develop a resolution through a bargaining process while the performances of different water export alternatives are uncertain. The analysis results are consistent with the findings of other studies using different decision analysis methods to analyze this multi-decision maker problem. Construction of a peripheral canal or a dual conveyance is expected if the parties change their cooperation attitudes, trying to benefit from a low level of cooperation in solving the Delta problems.