Page "Bargaining" Paragraph 14

In a classical bargaining problem the result is an agreement reached between all interested parties, or the status 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 theorem function.