Ariel Rubinstein's contribution to bargaining theory in Rubinstein (1982) captured the imagination of the economics profession. The origins of most papers in the wide-ranging and diverse literature that has since developed can be traced back to that seminal paper; even those papers that cannot have probably been inspired by the literature that has. At the same time as the development of the theory of bargaining, applied economic theorists have used models from this literature to construct models of a variety of economic phenomena that had hitherto not been studied at all, or not been studied properly. There is now a large literature that contains applications of that bargaining theory.

With the exception of John Nash's path-breaking contributions to bargaining theory in Nash (1950, 1953), much of the material in this book is based upon and/or inspired by the literature (theoretical and applied) that has developed since 1982.

I have written this book with two main objectives in mind. Firstly, from a theoretical perspective, I synthesize, and organize into a coherent and unified picture, the main fundamental results and insights obtained from the bargaining theory literature. The chapters are organized around the main forces that determine the bargaining outcome. I not only analyse the impact on the bargaining outcome of each force, but I also often analyse the relative impacts of two or more forces. And, secondly, from an applied perspective, I show how the theory can be fruitfully applied to a variety of economic phenomena.