Defendants who plead guilty usually receive substantially shorter sentences than observably equivalent people who are convicted at trial. One explanation for this discrepancy is that defendants receive a discount for pleading guilty. The primary theoretical model used to explain the different sizes of the discount is referred to as “bargaining in the shadow of the trial.” This model is a rational, choice-based model of defendant decision-making. The model establishes the maximum value of the potential plea or, alternatively, the minimally acceptable discount. The key parameter driving the size of the discount in this model is the probability of conviction. Although more empirical tests are sorely needed, there is some evidence supporting the basic model. However, social scientists have recently shown that actual innocence seems to matter to defendants above and beyond the probability of conviction. This chapter discusses the shadow model as a model of defendant decision-making, evaluates the current state of the evidence, and discusses some of the possible extensions and room for future research.