Decision-Makers Matter: An Operational Model for Environmental-Economic Conflict Resolution

Abstract

The characteristics of decision-makers are generally not included in models of environmental-economic conflicts. These models can be classified in two classes according to their goal: Multi Objective models include several conflicting objective functions that should be optimized simultaneously, and Game Theory models that result in a single solution analyzing the interactions among the players. Despite their applicability and usefulness these models have several limitations. The most severe is that, generally, the decision-maker is absent from both classes of models. We suggest an operational model for environmental-economic conflict resolution from the point of view of the decision-makers which addresses these concerns. The first step is building the Pareto frontier. Then the focus moves to the decision-maker characteristics: The appropriate game theoretic tool used to solve the conflict is chosen according to those characteristics. The result of this tailor-made game is a single Pareto optimal response which reflects both the decision-maker characteristics, the real-word relations of power between her and the players and among the players themselves. Introducing explicitly the decision-maker preferences in the model, results in more efficient solutions, and allow for a clear explanation about why the chosen solution is better than any other one, subject to the initial decision-maker characterization.