A game theory approach for the allocation of risks in transport public private partnerships

The process of risk allocation between public and private sectors in transport infrastructure agreements is analyzed as a bargaining process between these two agents. Such a process is modelled with a final offer arbitration game. The idea here is to analyze through a game framework the behaviour of the players when confronted with opposite objectives in the allocation of risks. The model shows that when guarantees have a higher value than financial loss we are confronted with strategic behaviour and potential moral hazard problems.