Bargaining models

Negotiation is a pervasive feature of social exchange. Bargaining theory and the related models examine the problem of rational individuals that pursue their own interest and must reach an agreement to divide the gains from cooperating. This article sketches two pillars of the literature on bargaining: the axiomatic solution of Nash (1950) and the solution of Rubinstein’s (1982) bargaining game with alternating offers. It also comments briefly on the recent applications of bargaining and cooperative game theory to strategy