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Game theoritic approaches to the Cauvery dispute February 8, 2007

Posted by Sharath Rao in economics, life, politics.
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Correction appended.

Lets see how it works.

Say Karnataka said they would give Tamil Nadu 200 units of water. Tamil Nadu says they want 250 units. I don’t know if X and Y are influenced by one another because each of them know what the other’s preference is. So even tomorrow TN agree that they are okay with 200 units. Then Karnataka will say they can give only 175 units. Or say Karnataka says they are willing to give 250 units, and then TN says no, we want 300 units. One solution is to give the arithmetic average. 225 units.

So what you ask for is not what you really need ( which may never be known ) but what the other side is willing is just concede. Note just, not happily concede. Each side’s thinking process is that if the other side is willing to agree to something, we can fight and get a little more. Just like when you go shopping, you quote a bargain price and if the seller readily agrees, you feel bad for having asked for lesser. If he quotes the price and you readily agree, he feels like an idiot for not having quoted more !

What if we had removed this knowledge? Both Karnataka and TN should go to the Tribunal and specify their preferences secretly ( practically hard but imagine so ) – X units from Karnataka and Y from Tamil Nadu.

What would happen next ? Thomas Schelling whose work on game theory and conflict resolution earned him the Economics Nobel will have more to say on this.

~~

Correction : In para 2, the sentence should read “Just like when you go shopping, you quote a bargain price and if the seller readily agrees, you feel bad for not having asked for a lower price.” Thanks Achala for pointing out the mistake.

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Comments»

1. achala - February 8, 2007

Shouldn’t it be “…you feel bad for not having asked for lesser.”?

2. Sharath Rao - February 8, 2007

Thanks !! you are rite…Appended the correction.

3. achala - February 8, 2007

You’re welcome. You coulda just added the word instead of a correction para…


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