Cost Allocation in Water Resources - Two Gaming Experiments with Doctoral Students

Stahl, I. (1980). Cost Allocation in Water Resources - Two Gaming Experiments with Doctoral Students. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-80-134

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Abstract

This paper reviews two gaming experiments with a game on cost allocation in water resources, carried out with doctoral students. The game is aimed at testing some different methods of cost allocation. Although many repeated game runs are necessary for conclusions, the main results of these two experiments, together with two earlier experiments on the same game but with real decision makers, are as follows:

(1) The method of allocating costs in proportion to demand was far worse as a predictor of outcome than any of the other methods discussed here.

(2) Of the four game theoretic methods, the method preferred from a normative point of view fared worst in all four games.

(3) In none of the four games the solution was in the core.

(4) In every game the coalition formation process started with some smaller coalitions being formed, then going on towards larger coalitions.

(5) There were fairly great differences between the decision makers and the students both with regard to outcomes and the negotiation process.

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