hidden
Image Database Export Citations

Menu:

Contracts versus Trust in Water Allocation: Growing & Sharing the Pie in Northeast Brazil

Show full item record

Type: Conference Paper
Author: Pfaff, Alexander; Velez, Maria Alejandra
Conference: Workshop on the Workshop 4
Location: Indiana University Bloomington
Conf. Date: June 3-6, 2009
Date: 2009
URI: http://hdl.handle.net/10535/1518
Sector: Water Resource & Irrigation
Region: South America
Subject(s): water resources
trust
allocation rules
efficiency
equity
Abstract: "We explore the efficiency and equity resulting from allocation of a fixed resource within a bargaining institution, using a modification of the Ultimatum Game with asymmetric productivity and a surplus-sharing step that permits us to explore trust. Sharing allows pie division independent of pie growth. We use generically framed experiments based on water allocation in NE Brazil with 570 participants in Ceara, in Fortaleza (the capitol) or the Jaguaribe (largest agricultural) Valley. These areas are soon to be further connected by a large canal to bring water towards Fortaleza. Our games have 3 steps: [1] proposers request a resource amount; [2] responders accept that split or reject it, yielding a low default payment for all; and [3] if that proposal was accepted, proposers choose whether to send back some of the gains. We consider three institutional designs distinguished by levels of communication. In 'No Communication', a benchmark, and in 'Message' where the proposer sends a non-binding written message about 3rd-step sharing conditional upon acceptance, we see evidence of 2nd-step trust (acceptance of less than the default) that pays off. Yet when that sharing message is a binding 'Contract', efficiency and equity rise."

Files in this item

Files Size Format View
velez_pfaff_wow4.pdf 179.9Kb PDF View/Open

This item appears in the following document type(s)

Show full item record