Evaluating Cooperative Game Theory in water resources

Abstract

Two empirical applications of Cooperative Game Theory concerned with regional cooperation in the use of irrigation water are presented. Both studies attempt to derive income maximizing solutions for the participants and the related income allocation schemes. Distinction is made between transferable and non-transferable utility situations. The reasonableness and the acceptability of the schemes derived are later critically evaluated. Main findings are: (1) use of utility functions leads to problems in gains allocations, (2) the Core concept may be useless in this application because since it is either difficult to calculate or is empty in many cases, (3) gains allocation and the derived core are heavily dependent on probabilities of coalitions formation in the Shapley value or the Generalized Shapley Value.