Game Theory and Decision Analysis in Public-Private Partnership Negotiations for Infrastructure Projects in Enugu State

This study applies game theory and decision analysis frameworks to the negotiation dynamics of public-private partnership arrangements for infrastructure development in Enugu State, South East Nigeria, where the state government has increasingly relied on PPP structures to mobilise private capital for roads, water supply, and health facility development. PPP negotiations involve strategic interactions between public sector parties and private investors with divergent objectives, information asymmetries, and binding commitment challenges, creating conditions that are well-suited to game-theoretic modelling. The study analyses four completed PPP negotiation processes in Enugu State, reconstructing the strategic interaction structure of each using documents, contract records, and interviews with negotiation participants. Bargaining theory, specifically the Nash bargaining solution and its extensions, is applied to model the division of project value between the public and private parties under alternative assumptions about disagreement points and bargaining power asymmetry. Mechanism design principles are applied to evaluate the incentive compatibility of performance-based payment structures in two of the four case contracts. Decision tree analysis is used to represent the sequential structure of one complex multi-stage negotiation involving environmental and community consent approvals. Results identify systematic patterns of public sector disadvantage in negotiations characterised by high private party information advantages regarding construction costs and revenue projections. Keywords: game theory, decision analysis, public-private partnerships, Nash bargaining, Enugu State