Agricultural land fragmentation in Iran: Application of game theory

Abstract Agricultural land fragmentation (ALF) is one of the main challenges of developing countries including Iran. ALF could affect agricultural production, rural development, labor supply, food security, and land use change. Therefore, ALF management should be one of the main components of the land policy and decision-making systems regarding agricultural lands. In Iran (similar to many other countries), ALF has two main players: farmers and government. The main aim of this study is to explain and evaluate the strategic space of decision-making between farmer and government regarding the issue of ALF in Iran using game theory. It presents an ALF strategic game model based on the ordinal and cardinal preferences of the players. The results of this study show that, in the ordinal form of the game, the farmer tends to fragment his or her agricultural land, although the strictly dominant strategy of the farmer is “do not fragment”. The main causes of conflict include: a) The players of this game act with respect to their best individual response and without considering the whole system payoffs; b) The players cannot create the necessary structures for collaboration; and c) There is not an external authority to enforce rules and regulations of the game. This study analyzes the ALF game under cardinal preferences that is closer to the real world of ALF. Concerning cardinal preferences, the best response of each player is related to at least four variables: the value of fragmented land (VF) and non-fragmented land (VN), the punishment value (PV), and the encouragement value (EV). This study concludes that if a government or land policy-makers want to manage ALF, they should not apply the same strategies for all the agricultural lands. The proper strategy for any kind of land is not only dependent on their policies (PV and EV) but also on VF and VN.