Intra-household bargaining

Intra-household bargaining refers to negotiations that occur between members of a household in order to arrive at decisions regarding the household unit, like whether to spend or save, whether to study or work.

Bargaining is traditionally defined in economic terms of negotiating conditions of a purchase or contract and is sometimes used in place of direct monetary exchange. Bargaining process within a family is one of the important aspects of family economics. Bargaining also plays a role in the functioning and decision making of households, where agreements and decisions do not often have direct monetary values and affect various members of the household.

Within the household unit and in the mathematical study of game theory, scholars have defined two distinct types of bargaining: cooperative and non-cooperative. 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 models. In non-cooperative bargaining models (also called unitary decision making), personal interests motivate individuals within the household rather than the desire to work in a collaborative manner and maximize the benefit of all household members.

The household is traditionally described as a single economic unit that “works as a group for its own good”, meaning all members of the household contribute in an altruistic manner towards the benefit and functioning of the entire household. The household is "the basic residential unit in which economic production, consumption, inheritance, child rearing, and shelter are organized and carried out". Though it is not always synonymous with family, in the case of intra-household bargaining, in which members of the household are considered to be one unit, the household is generally synonymous.

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