The seawall bargaining game (Q2346938)

Summary: Agents located from downstream to upstream along an estuary and exposed to a flooding risk have to invest in facilities like a seawall (or dike). As the benefits of that local public good increase along the estuary, upstream agents have to bargain for monetary compensation with the most downstream agent in exchange for more protection effort. The paper analyses different bargaining protocols and determines the conditions under which agents are better off. The results show that upstream agents are involved in a chicken game when they have to bargain with the most downstream agent.