Bargaining is traditionally defined in economic terms as the negotiating conditions of a purchase or contract and is sometimes used in place of direct monetary exchange.
These models aim to understand how individual preferences, power dynamics, and external factors influence the outcomes of divorce settlements, such as the division of assets, alimony, and child custody arrangements.
[11] This model acknowledges that spouses may have different spheres of influence and control over resources within the marriage, which can impact the negotiation process and outcomes during divorce.
[citation needed] Critics of these models argue that they may not fully capture the complexities of divorce negotiations, as they often rely on simplified assumptions about individual preferences and power dynamics.
[16] This suggests that the Nash-bargaining model can provide valuable insights into the complex dynamics of intra-household resource allocation and decision-making, capturing the potential influence of individual preferences and bargaining power on household outcomes.
[21] The Collective Model has been applied to various household issues and has provided valuable insights into the complex dynamics of intra-household resource allocation and decision-making.
[22][23] In cooperative bargaining models (also called collaborative decision making), the outcomes of negotiations are more equally beneficial to all members of the household, and have therefore been considered a more "natural" means of analyzing the family unit in comparison to Non-cooperative game theory.
[26]: 184 [27][28] The household is "the basic residential unit in which economic production, consumption, inheritance, child rearing, and shelter are organized and carried out".
[31] These conflicts of interest make bargaining a necessary part of family life and produce a setting where altruism is not always the guiding principle.
[4][32] These conflicts of interest have the potential to create a spectrum of intra-household dynamics, ranging from a non-cooperative to a cooperative household (which is directly reflective of game theoretic bargaining models).
[4] The concept of threat point or fallback position is a key component in the field of economics, particularly in the study of household bargaining dynamics.
[37] In the context of economic society, the concept of threat point or fallback position can be applied to understand the dynamics of power and negotiation within different societal structures, such as households, labor markets, and even countries.
It provides a framework for understanding how individuals or groups negotiate and make decisions based on their best alternatives, and how this affects their wellbeing and influence within their respective societal structures.
The access one has to individual assets, both economic (such as property, land, wealth, or earning ability) and personal (such as labor), determines fallback position because it is directly linked to one's capability of surviving outside the household.