A Non-Technical Introduction to Bargaining Theory

Bargaining is ubiquitous. Married couples are almost constantly negotiating over a variety of matters, such as who will do which domestic chores, who will take the kids to the local park on a wet Sunday afternoon, and whether or not the wife should take a part-time job, now that the kids are grown up. Government policy is typically the outcome of negotiations amongst cabinet ministers. Whether or not a particular piece of legislation meets with the legislature’s approval may depend on the outcome of negotiations amongst the dominant political parties. National governments are often engaged in a variety of international negotiations on matters ranging from economic issues (such as the removal of trade restrictions) to global security (such as the reduction in the stockpiles of conventional armaments, and nuclear non-proliferation and test ban), and environmental and related issues (such as carbon emissions trading, bio-diversity conservation and intellectual property rights). Much economic interaction involves negotiations on a variety of issues. Wages, and prices of other commodities (such as oil, gas and computer chips) are often the outcome of negotiations amongst the concerned