Bargaining Power: Significance, Structure and Development

Abstract

In game theory, the bargaining problem is defined as an exchange of utilities between negotiators. Assumptions used in game theoretical solutions are often partially or fully not applicable in real situations. The outcome of the bargaining also depends on the parameter called bargaining power. This parameter, although usually neglected or perceived only as static, determines to a large extent on which negotiator will succeed with his idea of the distribution of utilities. Paper focuses on the identification of the elements of bargaining power, the possibilities of their exploration and development. Bargaining power is described as a combination of facts and abilities that can be variable during bargaining. The paper analyses these facts and abilities, divides them into individual parts and suggests, how to influence them both immediately and in the long run.

Keywords

• game theory
• bargaining problem
• bargaining solution
• bargaining power