Multidimensional Preference Game and Extreme Dispute Resolution for Optimal Compensation of House Expropriation

Abstract

Although the compensation for house expropriation has increased significantly in recent years, the conflicts persist. The subjects in the expropriation process have multiple behavioral preferences, such as self-interest, loss aversion, and inequity aversion, and the expropriation process is hampered by extreme disputes on expropriation compensation. In order to make the houseowners agree to the expropriation immediately and tackle the root of extreme disputes, this paper establishes a two-stage sequential game model involving local government and two houseowners, analyzes the different payoff situations under multidimensional preferences, and finds out the optimal compensation standard. Then, through a case analysis, the TOPSIS method is used to determine the ideal strategy when the houseowners are simultaneously considering three preferences. The optimal compensation standard’s value is discovered to be significantly influenced by the houseowners’ behavioral preferences, but the compensation cannot be raised by excessive attention to the reference point and other houseowners.