Strategic Two-Player Decision-Making for Residential Density Planning: Game-Theoretic Decision Structures in Urban Contexts

Residential density planning is a core instrument of urban planning, land-use intensity, built form, infrastructure demand, and long-term sustainability outcomes. Although residential density limits are defined through planning regulations which the density ultimately realised in development projects emerges through strategic interactions among stakeholders. Within this environment, the most influential interaction occurs between the actor requesting development density and the government authority responsible for approving density within regulatory limits. Understanding how strategic decisions taken by these two key players shape residential density outcomes remains an important challenge in planning practice.

This study examines strategic two-player decision-making in residential density planning using game-theoretic decision structures and the research focuses on how optimum residential density levels are achieved within a fixed regulatory envelope, where planning controls define permissible development capacity. Within these constraints, multiple density configurations remain feasible, enabling density to be realised through alternative vertical, horizontal, or combined strategies. The study simulates how density requests and approval responses interact under such rule-defined conditions. Two decision structures commonly observed in planning practice are examined as simultaneous decision-making, where both players act without knowledge of the other’s choice, and sequential decision-making, where one player’s action follows observation of the other’s move.

The findings show that decision structure significantly influences stakeholder behaviour and the stability of residential density outcomes. Simultaneous decision structures tend to encourage balanced strategic responses and more consistent realisation of optimum density levels, while sequential structures introduce strategic asymmetry that can lead to less stable density configurations. By explaining how two-player decision structures operate within regulatory limits, this study contributes a clearer understanding of strategic decision-making processes in residential density planning and supports more rational and effective urban planning practice.