In most bargaining situations, there is usually a preliminary discussion, called negotiation. The word negotiation is derived from Latin and in civil law means “trading on deliberations leading to an agreement.”
The modeling approach to bargaining is to determine what contract, that is, agree joint strategy, might or should be reached. The bargaining model offers an agreement (solution) (Rubin & Brown, 1975).
However, have felt the similarities of definition are so strong that the terms bargaining and negotiation can be used interchangeably, even though occasional distinction is made between the terms.
The minimum necessary variables for a model of the overall bargaining process include both the decision maker’s and the opponent’s initial offers, desired outcomes, maximum level of concession (zero profit level), and rate of concession.
Two parties can bargain over price; the seller usually wants the price to be high, while the buyer wants the price to be low. The seller is often working under a profit-maximization strategy and the buyer is more interested in minimizing cost.