Bargaining

Bargaining is a negotiation in which parties seek agreement on the terms of an exchange. Each party can influence the outcome by making offers, concessions, or threats to walk away.

Bargaining power: The ability of a party to influence negotiation outcomes in its favor. Differences in bargaining power shape which terms each side can secure.
Transaction cost: A cost of arranging, negotiating, or enforcing an exchange beyond the price of the goods involved. High negotiation and enforcement costs can consume the gains that make bargaining worthwhile.
Collective bargaining: Negotiation between employers and workers’ representatives over employment terms and conditions. Unions bargain collectively to set wages, hours, and workplace rules.
Auction: A market mechanism that allocates goods through competing bids under specified rules. Auctions use structured competition rather than direct bilateral bargaining to set terms.
Nash bargaining solution: A solution concept that selects a bargaining outcome by maximizing the product of parties’ gains over disagreement. It formalizes one way to divide gains while accounting for each party’s fallback position.
Reservation price: The least favorable price or terms a party will accept in a transaction. A party’s reservation price sets the boundary beyond which bargaining cannot produce agreement.
Incomplete contract: A contract that leaves some future contingencies or obligations unspecified. Unspecified terms leave room for later bargaining and disputes over adaptation.
Wage negotiation: Negotiation between an employer and a worker over compensation for employment. Wage bargaining applies exchange logic to the price of labor.
Take-it-or-leave-it offer: An offer that must be accepted as presented or rejected without further negotiation. It removes the back-and-forth that distinguishes bargaining from unilateral price setting.
Ultimatum game: A game in which one player proposes a division and another accepts or rejects it. Experiments with this game show how fairness concerns can alter bargaining behavior.

Linked from 7 pages