Negotiating land and property development: a game theoretical approach to value capturing

Purpose – The purpose of this paper is to provide an understanding of how a phenomenon or process of collective action with regard to the negotiation in value capturing can be expected to happen in a certain way, which in the end could improve our understanding of value capturing implementation processes. Design/methodology/approach – Game theory is utilized to model the structure of relations between the actors involved. Game theory is a mathematical approach to study collective decision‐making situations in which the decision makers involved have conflicting preferences. Here, the authors consider the implementation of value capturing as the result of an agreement between a municipality and landowners to contribute to the costs of public infrastructure development which, in essence, is a form of collective action. Findings – The paper is not only demonstrating the usefulness of game theoretical modelling in conceptualising relations between different stakeholders in the implementation of value capturing and suggesting the best possible strategy for every stakeholder; but also observing the limitations of the methods in analyzing the behaviour of actors involved in decision‐making processes with respect to value capturing. Originality/value – Unlike most of value capturing studies which focused on either a valuation point of view (how much value can be captured?), a governance or instrumentalist point of view (which instruments can be effective for value capturing?), or a political point of view (to whom belongs the increment value that is the result of government investments or decisions?) – this paper emphasizes an alternative perspective to value capturing, namely the decision‐making or negotiation process underlying value capturing by relying on game‐theoretical approach.