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Evaluating the Stability of the Oil and Gas Exploration and Production Regulatory Framework in Brazil

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Abstract

This paper proposes to use game theory and equilibrium solution concept approaches to model and evaluate the stability of the oil and gas E&P regulatory framework in Brazil. We initially modeled the oil and gas E&P market as a non-cooperative multicriteria game and then applied the solution concepts presented in the GMCR methodology for evaluating the stability of the modeled game. There are indications that the logic behind the modeled game of choosing an adequate regulatory regime for the Brazilian oil and gas E&P market is similar to the classical game of Battle of the Sexes. Following the logic of this game, it is suggested that only in the presence of strong guarantees that the eventual sacrifice of players’ payoffs in the short or medium term will be compensated in the future, the regulatory framework of the oil and gas E&P market in Brazil can be considered stable.

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Notes

  1. Multicriteria games are also known in the literature as vector games.

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Acknowledgements

To CAPES for the scholarship in the program DS-CAPES and for the commentaries of the anonymous reviewers that were very important for the improvement of the paper.

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  1. Research Group in Decision Sciences, School of Economics, Business Administration and Accounting, University of São Paulo, Av. Bandeirantes 3900, Ribeirão Preto, 14040-900, Brazil

    Felipe Costa Araujo & Alexandre Bevilacqua Leoneti

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  1. Felipe Costa Araujo
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  2. Alexandre Bevilacqua Leoneti
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Correspondence to Alexandre Bevilacqua Leoneti.

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Araujo, F.C., Leoneti, A.B. Evaluating the Stability of the Oil and Gas Exploration and Production Regulatory Framework in Brazil. Group Decis Negot 29, 143–156 (2020). https://doi.org/10.1007/s10726-019-09643-4

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