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Encyclopedia > Bargaining

Bargaining is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement. It is very prevalent in many parts of the world, although it is rare in Europe and North America. In the regions where it is common, only certain transactions are considered appropriate for bargaining. Context determines the appropriateness; for instance, a comfortable and air-conditioned store may not allow bargaining, but a stall in a bazaar or marketplace may. In some areas, the phrase fixed price indicates that bargaining is not allowed. Negotiation is the process whereby interested parties resolve disputes, agree upon courses of action, bargain for individual or collective advantage, and/or attempt to craft outcomes which serve their mutual interests. ... World map showing Europe A satellite composite image of Europe Europe is conventionally considered one of the seven continents which, in this case, is more a cultural and political distinction than a physiogeographic one. ... World map showing North America A satellite composite image of North America. ... A bazaar is a market, often covered, typically found in areas of Muslim culture. ... A marketplace is the space, actual or metaphorical, in which a market operates. ... Fixed price is a phrase used in Indian English to mean that no bargaining is allowed over the price of a good or, less commonly, a service. ...

Contents


Bargaining Theories

Behavioral Theory

The personality theory in barganing emphasizes that the type of personalities determine the bargaining process and its outcome. A popular behavioral theory deals with a distinction between hard-liners and soft-liners. Various research papers refer to hard-liners as warriors, while soft-liners are shopkeepers.


Bargaining Game Theory

Bargaining games refer to situations where two or more players must reach agreement regarding how to distribute an object or monetary amount. Each player prefers to reach an agreement in these games, rather than abstain from doing so; however, each prefers that agreement which most favours his interests. Examples of such situations would be the bargaining involved in a labour union and the directors of a company negotiating wage increases, the dispute between two communities about the distribution of a common territory or the conditions under which two countries can start a programme of nuclear disarmament. Analyzing these kinds of problem looks for a solution specifying which component in dispute will correspond to each party involved.


Players in a bargaining problem can bargain for the objective as a whole at a precise moment in time. The problem can also be divided so that parts of the whole objective become subject to bargaining during different stages.


In a classical bargaining problem the result is an agreement reached between all interested parties, or the statu quo of the problem. It is clear that studying how individual parties make their decisions is insufficient for predicting what agreement will be reached. However, classical bargaining theory assumes that each participant in a bargaining process will choose between possible agreements, following the conduct predicted by the rational choice model. It is particularly assumed that each player's preferences regarding the possible agreements can be represented by a von Neumann-Morgenstern utility function.


Nash [1950] defines a classical bargaining problem as being a set of joint allocations of utility, some of which will correspond to that the players would obtain if they reach an agreement, and another which represents what they would get if they failed to do so.


A bargaining game for two players is defined as a pair (F,d) where F is the set of possible joint utility allocations (possible agreements), and d is the disagreement point.


For the definition of a specific bargaining solution is usual to follow Nash's proposal, setting out the axioms this solution should satisfy. Some of the most frequent axioms used in the building of bargaining solutions are efficiency, symmetry, independence of irrelevant alternatives, scalar invariance, monotonicity, etc.


The Nash bargaining solution is the bargaining solution which maximizes the product of agent's utilities on the bargaining set.


Processual Theory

This theory isolates distinctive elements of the barganining chronology in order to better understand the complexity of the negotiating process. Several key features of the processual theory include: Chronology is the science of locating events in time. ...

    • Bargaining Range
    • Critical Risk
    • Security Point
    • Toughness Dilemma

Integrative Theory

The theory emphasizes the gradual and step-by-step approach to reaching an agreement. Three separate steps are distinguished: diagnostic phase, formulation phase and implementation phase. Diagnosis (from the Greek words dia = by and gnosis = knowledge) is the process of identifying a disease by its signs, symptoms and results of various diagnostic procedures. ... Formulation ... ...


  Results from FactBites:
 
Bargaining - Wikipedia, the free encyclopedia (660 words)
Bargaining is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement.
Examples of such situations would be the bargaining involved in a labour union and the directors of a company negotiating wage increases, the dispute between two communities about the distribution of a common territory or the conditions under which two countries can start a programme of nuclear disarmament.
A bargaining game for two players is defined as a pair (F,d) where F is the set of possible joint utility allocations (possible agreements), and d is the disagreement point.
Collective bargaining - Wikipedia, the free encyclopedia (507 words)
Collective bargaining is the process of negotiation between representatives of a union and employers (represented by management) in respect of the terms and conditions of employment of employees, such as wages, hours of work, working conditions and grievance procedures, and about the rights and responsibilities of trade unions.
The term is reputed to have been coined by the British academic Beatrice Webb in the late 19th century to describe a process alternative to that of individual bargaining between an employer and its individual employees.
In Britain collective bargaining has been, and has been endorsed as, the dominant and most appropriate means of regulating workers' terms and conditions of employment, in line with ILO Convention No. 84 for many years.
  More results at FactBites »

 
 

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