The Rubinstein Bargaining Model

The Rubinstein Bargaining Model describes how two parties negotiate over dividing a resource or agreement over time, knowing that each takes turns proposing deals. They weigh their options based on how long they must wait for an agreement—there’s a cost to waiting. The process continues until they reach a mutually acceptable split. This model highlights how factors like patience, timing, and bargaining power influence the final outcome, illustrating that negotiations are strategic and dynamic rather than fixed. It provides a formal way to analyze bargaining situations where delays and future considerations matter.