Asymmetric Bargaining Research Articles

Fairness Deliberations and Fair Allocations in Symmetric and Asymmetric Bargaining–An Experimental Study on Group Decisions in Germany and China

AbstractThe study’s primary focus is on examining fairness deliberations of bargainers in Germany and in China under symmetric and asymmetric bargaining power to understand whether they incorporate fairness into their decision process and, if so, how this affects bargaining outcomes. To this end, we conducted an incentivized ultimatum bargaining experiment with symmetric and asymmetric outside options. Groups (N = 142) of three persons interact as proposers and responders in dyads and decide simultaneously on their offer or which offers to accept or reject. Communication between parties is inhibited. We videotaped in-group discussions; the resulting transcripts were text analyzed by eliciting whether groups make fairness an issue, which fairness norms they discuss, and whether they use fairness-related perspective-taking to overcome the communication constraint. We find that asymmetry of bargaining power in favor of the proposer leads to lower offers relative to the symmetric situation. Not all groups make fairness an issue, and fairness deliberations alone have no significant impact on offers. However, when associated with the equal-payoff norm, and in Chinese groups in particular, discussing fairness increases offers in symmetric but also in asymmetric situations, in which other fairness norms could have been applied, too. Fairness-related perspective-taking is used by German and Chinese groups and is associated with higher offers in the former. Our study makes an epistemological and related methodological contribution: a possibly biased interpretation of bargaining outcomes can be mitigated if information on decision processes and underlying mechanisms were available.

Transactive energy management for CIES considering tri-level hybrid game-theoretic approaches with multiple weight allocation factors

In city integrated energy systems, to reduce the costs of energy production and usage, it is extremely important for different entities to design proper energy management approaches since they have diverse behaviours and benefits. The hierarchy of the system is naturally divided into three layers, and hybrid game theories are employed on the basis of the vertical master–slave and horizontal equal cooperation characteristics among energy providers, aggregators, and users. First, to reflect the interactions between different levels' entities, Stackelberg game theory is adopted vertically, and the model complexity is lessened by the KKT conditions. Then, for energy providers, the asymmetric bargaining game is improved by combining multiple weight allocation factors, which can help reduce renewable energy fluctuations and encourage the consumption of clean energy to reduce the carbon emissions of the system. Also, the results show that the proposed method can enhance the utility of renewable energy generation units by approximately 64 % to 69 %. Finally, the optimality and effectiveness of the proposed game theoretic approaches are verified in case studies and in strict mathematical proofs. In addition, the impact mechanisms on the demand response from the perspectives of the user load and price sensitivity are analysed. To explore pricing methods that are more suitable for user aggregators, two pricing strategies are designed for the user aggregator and compared in terms of computation time and revenue. The results show that a unified pricing strategy can increase the aggregator's revenue by 1.24 % and reduce the computation time by 24.47 %.

Capacity and operation joint optimization for integrated energy system based on Nash bargaining game

Integrated energy systems (IESs) can uniformly coordinate different locations and diversified forms of energy systems, which is critical for ensuring low-carbon and sustainable energy usage. This paper proposed a capacity and operation joint optimization method for an IES with multiple interconnected energy hubs (EHs) based on the Nash bargaining game. Firstly, considering the uncertainty of the EH, robust optimization was carried out for both long-term capacity planning and short-term operational strategies at the same stage. Furthermore, the optimization of the single EH is embedded in the cooperative framework of the IES, and it is formulated as an asymmetrical Nash bargaining game model, in which the players bargain over the transaction energy. Finally, this game model is solved by the alternating direction method of multipliers algorithm. Case studies with a typical IES including three EHs are conducted to verify the effectiveness of the proposed methods. It was found that the proposed joint optimization method has better computational ability than traditional two-stage method. The asymmetrical bargaining solution can not only effectively reduce the cost of the IES, but also help achieve a fair benefit balance among EHs.

Bidding strategies for multi-microgrid markets taking into account risk indicators

A large proportion of new energy generation is integrated into the power grid, making it difficult for the power grid system to maintain reliable, stable, and efficient operation. To address these challenges, this article proposes a multiple microgrid hierarchical optimization structure based on energy routers as the core equipment for energy regulation within microgrids. Considering the uncertainty of renewable energy generation within microgrids, a two-layer energy management bidding strategy based on risk indicators is further proposed. In the process of trading, with the goal of maximizing a comprehensive economy, the energy trading model of the distribution network center and energy routers is divided into two sub-objectives for solving. In the first stage, based on the interests and energy supply and demand relationships of each microgrid, a risk assessment model considering wind and solar uncertainty is established to determine the risk preferences and expected returns of each microgrid. In the second stage, the original problem is decomposed into two sub-problems: the minimum cost sub-problem and the maximum transaction volume sub-problem. An asymmetric bargaining mechanism is adopted to determine the production and sales payment of the microgrid containing energy routers based on the contribution values of energy routers in each microgrid. Finally, the rationality and effectiveness of energy routers as an intelligent decision-maker in energy optimization are verified in a three-node system.

Distributed transaction optimization model of multi-integrated energy systems based on nash negotiation

Integrated energy system (IES) can achieve multi energy complementarity, but it still faces the problem of energy surplus or shortage. Therefore, there are demands for energy sharing among different IESs, but how to determine the trading quantity and trading price? To address this confusion, a distributed optimization model for multi-IES participating in peer-to-peer (P2P) transactions based on asymmetric Nash negotiation is innovatively proposed. First, to facilitate the energy sharing of several IESs with different structures, a P2P trading framework is designed. Second, to meet the needs of individual rationality and alliance cooperation at the same time, a distributed transaction optimization model based on Nash negotiation is proposed. Considering the discourse power determined by contribution, an asymmetric bargaining mechanism is designed. Third, to protect the privacy and improve solution performance, the improved adaptive step-size alternating direction multiplier algorithm (ADMM) is used for the distributed sequential solution. Finally, the effectiveness of the proposed trading framework, bargaining mechanism, optimization model, and solution algorithm are verified by the implementation of simulation. The simulation results show that: 1) The proposed model and algorithm can assist managers in determining the quantity and price of P2P electricity transactions. 2) Compared with the independent operation mode, the cooperative operation mode has significantly improved the overall interests and individual interests. 3) In distributed transactions, managers only need to submit limited information, which protects the privacy and security of each agent. 4) The asymmetric Nash negotiation mechanism can measure discourse power based on contribution. 5) The improved ADMM has the advantages of stronger convergence performance and faster solution speed.

Stackelberg-Nash asymmetric bargaining-based scheduling optimization and revenue-allocation for multi-operator regional integrated energy system considering competition-cooperation relationship and source-load uncertainties

The integration of source-grid-load-storage greatly improves the energy managing flexibility of regional integrated energy systems (RIES). Considering the conflicting interests of multi-operator, this paper divides RIES into 1) energy supply center (ESC); 2) load aggregator (LA); 3) energy storage aggregator (ESA), and establishes a multi-operator two-layer optimal scheduling model by combining 1) the Stackelbelberg-Nash asymmetric bargaining game based on the genetic algorithm; and 2) the alternating direction method of multipliers algorithm (GA-ADMM). Firstly, considering the absence of historical data, trapezoidal fuzzy parameters are introduced to construct fuzzy chance constraints based on credibility theory to simulate the source-load uncertainties. Secondly, the uncertainty of demand response behavior, real-time carbon credits trading within RIES, and cooperation-competition behavior of followers (LA and ESA) are considered to simulate the asymmetric relationship between followers and leaders (ESC) based on GA. Then, based on the ADMM algorithm, a Nash asymmetric bargaining game considering energy dependency and energy supply-reception status is proposed to realize the revenue allocation between followers. Finally, simulations are implemented to verify the validity and reliability of the proposed model. Results show that: 1) Cooperation improves the energy-managing flexibility of followers, reduces their dependence on ESC, and thus enhances their game ability. 2) The real-time carbon credits trading enables zero-carbon energy interactions and natural gas replenishment within RIES. 3) Increases in the price of various energy and carbon credits can enhance cooperation between followers.

Equality in legislative bargaining

I study a distributive model of legislative bargaining in which the surplus generated by a winning coalition equals the sum of productivities of coalition members. The heterogeneous ability of players to generate surplus leads to asymmetric bargaining prospects in otherwise symmetric environments. More productive players are recruited more often by other players despite having higher expected payoffs; however, the players who are recruited in every coalition have equal expected payoffs despite having different productivity. I show that an increase in the required quota raises equality as measured by the Gini coefficient. The distribution of expected payoffs is more equal than the distribution of productivities but this advantage disappears under the less-than-unanimity voting as players become perfectly patient.

Initially contestable property rights and Coase: Evidence from the lab

This article investigates how the existence of initially contestable property rights affects the efficiency of the Coase theorem. We design a two-stage experiment that incorporates a stage where property rights are initially allocated to participants followed by a stage that allows bargaining between participants. In stage one, participants endogenously choose rent-seeking effort (and thus the probability) to initially obtain property rights before entering an unstructured bargaining game. We find the presence of costly rent seeking to obtain the property rights makes it significantly less likely that the efficient outcome is reached. We introduce bargaining costs and find that allowing for symmetric bargaining costs has no impact on the likelihood of the efficient outcome being reached, whereas asymmetric bargaining costs – costs that differ if the player wins or loses the initial property rights – substantially reduces the likelihood of reaching an efficient outcome. Our analysis is applicable to contexts with initially contestable and tradable nature resource rights.

Allocation of decision rights among two parties with asymmetric bargaining powers in bidirectional open innovation

Allocation of decision rights among two parties with asymmetric bargaining powers in bidirectional open innovation

A typology of resistance: the ‘hot potato’ of European return in West Africa

ABSTRACT Forced returns from Europe are politically highly sensitive across West Africa. Yet, there is enormous pressure from the European Union on West African governments to improve cooperation on returns. This paper seeks to answer how countries such as Nigeria, Senegal and The Gambia are resisting this pressure. Based on 129 qualitative interviews on both continents, the paper develops a typology that shows that states use a range of responses in the face of external and domestic pressures. These range from reluctant compliance to both reactive and proactive incompliances. States are likely to use all these strategies at different times, sometimes simultaneously. Thus, countries are resisting return, albeit in subtle ways given their asymmetric bargaining position.

An Asymmetric Bargaining Model for Natural-Gas Distribution

For the sustainable socio-economic growth, the energy supply is one of the foundations for any country. The gas shortage is one of the most significant impediments to any emerging country’s economic progress, making it a contested and disputed resource. In the middle of a supply–demand mismatch, distributing limited available gas across administrative units/provinces with competing requirements is a key challenge. In this work, an asymmetric gas allocation bargaining model is proposed under gas shortage to resolve natural gas-related disputes among Pakistan’s administrative units/provinces. Each administrative unit/province is characterized by its gas demand. Results show that the Nash bargaining theory, when applied under equal and bargaining weights, can address the supply–demand mismatches of the gas sector in Pakistan. Such an approach could help policymakers to make a fair gas-supply management system during gas shortage periods and would help in resolving the disputes between the provinces.

Distortion Through Modeling Asymmetric Bargaining Power

Distortion Through Modeling Asymmetric Bargaining Power

Asymmetric input contracts under price leadership

AbstractThis paper considers a vertically related industry where an upstream supplier simultaneously and independently negotiates linear tariffs with two asymmetrically capacity constrained downstream retailers endowed with (possibly) asymmetric bargaining powers over the purchase of an input. We introduce price leadership as the type of downstream competition. An increase in the upstream supplier’s bargaining power toward the large firm induces a positive externality on the small firm’s tariff. We also obtain that, a priori the small firm may end up (i) demanding a larger stock of the input and (ii) paying less for it. Our model also proves useful to show that the well‐known countervailing buyer power hypothesis could not hold because an integrated downstream firm might negotiate a better input price without any pass‐through to the final consumers. We mainly relate our analysis to the UK grocery market and to the recent empirical evidence regarding its functioning.

Equity and Equality in Legislative Bargaining

I study a distributive model of legislative bargaining in which the surplus generated by coalitions depends on the membership and the proposer. The vector of expected payoffs is unique and continuous in the characteristics of players when the surplus does not depend on the proposer's identity. The heterogeneous ability of players to generate surplus leads to asymmetric bargaining prospects in otherwise symmetric environments. More productive players have higher expected payoffs despite being recruited more often by other players, and the players who participate in every coalition have equal expected payoffs despite having different productivity. The bargaining outcomes are equal and efficient when the productivity is sufficiently homogeneous, while the effect of increased heterogeneity depends on the distribution of productivity. When the players become arbitrarily patient, the bargaining outcomes are equitable and efficient but not necessarily equal. An increase in the required quota promotes equality but leads to less equitable outcomes.

Asymmetric Input Contracts with Price Leadership and Capacity Constraints

This paper considers a vertically related industry where an upstream supplier simultaneously negotiates with two downstream retailers endowed with (possibly) asymmetric bargaining powers, over the purchase of an input. Downstream firms have asymmetric capacities and downstream competition has a price leadership structure. Under linear tariffs, an increase in the upstream supplier's bargaining power towards the large firm induces a positive externality on the small firm's tariff. Under two-part tariff, instead, cross effects vanish. In both regimes, we obtain that, a priori the small firm may end up i) demanding a larger stock of the input and ii) paying less for it. Our model also proves useful to show that the well-known countervailing buyer power hypothesis may not hold because an integrated downstream firm might negotiate a better input price without any pass-through to the final consumers. We mainly relate our analysis to the UK grocery market and to the recent empirical evidence regarding its functioning.

Renegotiating Belt and Road cooperation: social resistance in a Sino–Myanmar copper mine

In what way can societal actors in transitional polities play a role in influencing bilateral economic agreements? Societal actors are often ignored in the state-centric international relations literature. We, however, contend that social resistance to a foreign development project can reshape the international outcome, even under an asymmetric bargaining structure, if two conditions are met: the host country’s policy options are conditioned by citizens’ resistance; and the home country is eager to continue cooperation. To make this argument, this paper examines the social resistance to the China-backed Letpadaung copper mine in Myanmar amid the host country’s democratisation. Employing a process-tracing technique and drawing upon extensive interviews from 2015–2019, official documents and secondary data, we argue that a popular anti-mining movement transformed a previous state-to-state bargaining process into a two-level game negotiation. As a result, the rise of societal actors was able to disrupt project implementation and extract concessions from China in exchange for project resumption.

Asymmetric Bargaining Model for Water Resource Allocation over Transboundary Rivers.

Sustainable transboundary water governance is often challenged by conflicts between agents, which necessitates the design of cooperative and self-enforcing alternatives to facilitate equitable water distribution. The Nash bargaining approach, which originated from game theory, could offer a good mathematical framework to simulate strategic interactions among involved agents by considering individual rational benefits. Given that river-sharing problems often involve multiple self-interested agents, the asymmetric Nash bargaining solution (ANBS) could be used to describe agents’ powers, as determined by disparate social, economic, and political as well as military status, and ensure win–win strategies based on individual rationality. This paper proposed an asymmetric bargaining model by combining multi-criteria decision making, bankruptcy theory, and the ANBS for water distribution in the transboundary river context. The Euphrates River Basin (ERB) with three littoral states was used as a case study. Turkey has the highest bargaining power in ERB negotiation since it dominates in terms of economic strength, political influence, and military capacity, whereas in the two downstream countries these aspects are limited due to their internal political fragmentation and weaker military status. The water satisfaction percentages of Turkey, Syria, and Iraq under the best alternative are 96.30%, 84.23%, and 40.88%, respectively. The findings highlight the necessity for synthetically considering the agent’s disagreement utility and asymmetrical power when negotiating over water allocation.

Re－prioritizing Policy Options for Achieving SDG Goals 7 in Korea

This paper attempts to review and reposition policy instruments in achieving SDG Goal 7 in Korea. It is necessary to flexibly re-prioritize current policies in response to new circumstances. As in detailed indicators of SDG Goal 7, the expansion of renewable energies and the energy efficiency improvement policies have been steadily strengthened in Korea, and the recent achievements of green growth and climate change are significant. This study analyzes the current state of energy-related sustainable development policies in Korea and suggests policy implications to improve the SDG Goal 7 targets. Incentive structures should be expanded in regulatory and monitoring frameworks, including subsidy and financial support. In addition, financial support should be extended to SMEs whose potential is not sufficiently managed due to institutional difficulties. The cooperation between large and small enterprises in the energy and greenhouse gas management is difficult to achieve due to the subcontracting structure and asymmetric bargaining structure in Korea. To improve this, it is required to enhance the system in which financial support for SMEs is strengthened. To improve energy efficiency and expand renewable energy, policy makers must maintain consistency in setting regulatory targets considering long-term goals.

The uniqueness of uranium: The Problematics of Statecraft in Niger

How does the nature of uranium affect the ability of developing states to leverage it for the purposes of economic development? Two potential explanations for Niger’s inability to gain from its uranium deposits—first, the resource curse, and second, Niger’s asymmetric bargaining power with Areva—have dominated conventional wisdom. However, we contend that these explanations are incomplete because of the difficulties specific to uranium as a commodity. Instead, we highlight five principal challenges—strict international regulations, non-transparent uranium pricing markets, limited supply and demand, constrained global supply chains, and the lack of domestic usage—to explore why uranium per se, above and beyond the resource curse and asymmetric bargaining, presents unique challenges for developing countries to leverage for economic development. To show this phenomenon, we draw on our 2016 fieldwork interviewing members of the Nigerien government and those in the Nigerien uranium sector to demonstrate the challenges of translating its vast uranium deposits into sustained economic growth.

Moral Entitlements and Aspiration Formation in Asymmetric Bargaining: Experimental Evidence from Germany and China

Using a unique experimental data set, we investigate how asymmetric legal rights shape bargainers’ aspiration levels through moral entitlements derived from equity norms and number prominence. Aspiration formation is typically hard to observe in real life. Our study involves 15 negotiations from Germany and China. Over the course of the negotiation, bargainers discuss the distribution of an amount of money by alternating offers until they consent or break off. Legal rights are randomly assigned by asymmetric outside options. We videotape and code the in-group discussions. In total, verbal data from 30 groups, 1100 pages of transcripts, and 65 h of discussions are content-analyzed. Our main finding is that strong groups derive and defend moral entitlements from equity concerns with regard to their outside options. They strive for equitable but unequal distributions (e.g., proportional split and split the difference). Moral entitlements materialize in the recorded aspiration levels and final payoffs, which exceed the equal split. By contrast, weak groups aim at equality. Over the course of the negotiation, equity tends to lose, while the prominence of round numbers gains importance. Similarities between the subject pools are found in that equity and prominence are both decisive for the formation of aspiration levels. Chinese negotiations are characterized by long periods of stagnation, only minimal concessions, and the communication of false goals. By contrast, Germans steadily reduce their goals and make concessions.