From Confrontation to Negotiation: An Economic Game Model of Residential Holdouts and a People-Centered Mechanism for Conflict Resolution

Abstract

Urban redevelopment and housing expropriation can generate prolonged bargaining when affected households reject compensation offers, potentially increasing project delay, litigation, and enforcement costs. Existing research commonly examines compensation fairness, administrative law, or social governance separately, with less attention to how household reservation values, government delay costs, procedural quality, and negotiation mechanisms interact within a unified economic framework. This study develops a sequential bargaining model between the expropriating authority and affected households and combines it with three open-source datasets: 44 city-year housing-price observations for Beijing, Shanghai, Wuhan, and Guangzhou from 2015 to 2025, nine local expropriation policy documents, and 13 Supreme People’s Court typical cases. Housing-price changes ranged from negative 9.1 percent to 31.7 percent, indicating substantial variation in the external valuation environment. Among the nine policy documents, six explicitly provided compensation choice and appraisal-review mechanisms, six included signing incentives, and all nine contained hardship-support provisions. Within the purposively selected court cases, procedural objections appeared in all 13 cases, valuation differences in three, compulsory relocation or enforcement in two, and mediation or coordination in five. These findings support a mechanism-based interpretation of residential holdouts. People-centered reconciliation is therefore understood not as unlimited compensation, but as an institutional approach that reduces information asymmetry, transaction and friction costs, accommodates heterogeneous relocation losses, and enlarges the feasible bargaining range.