ELSEVIER JOURNALOF EcOnomicElehavk Journal of Economic Behavior & Organisation Vol. 30 (1996) 97-l 11 &oIganization Modelling multilateral negotiations: An application to California water policy Gregory Adamsay*, Gordon Rausserb and Leo Simonb zyxwvutsrqponmlk ‘Law and Economics Consulting Group, 2000 Powell Street, Suite 600, Emeryville, Berkeley, CA 94608, USA bDepartment of Agricultural and Resource Economics, University of California, Berkeley, CA, USA Received 22 March 1994; revised 15 August 1995 zyxwvutsrqponmlkjihgfedcbaZYXW Abstract In this paper we advance a new framework for noncooperative, multilateral bargaining that can be used to conceptualize negotiation processes. In the proposed game theoretic setting, the outcome of the negotiation process depends crucially on the “constitutional” structure of the game: the input each group has in the decision making process, the coalitions of groups that can implement proposals, the scope of the negotiations and, the outcome if the parties fail to reach agreement. Computer simulations allow investigation of the likely outcome of negotiations under various constitutional regimes. Analysis of recent water policy negotiations in California illustrates the capacity of the model. JEL class$cation: C78; 425 Keywords: Noncooperative bargaining; Negotiations; Simualtion models; Water policy 1. Introduction Many important policy disputes involve a large number of individuals or interest groups and a large number of issues. Representative examples abound, from the GATT negotiations and health care reform to the myriad domestic and international environmental policy issues. Resolution of these disputes often relies on some form of bargaining; either formally (such as the negotiations leading to the Montreal Protocol on chlorofluorocarbon emissions) or in a variety of less formal settings, which may include * Corresponding author. Published by Elsevier Science B.V. All rights reserved PII: SOl67- 2681(96)00844- X