This review outlines the work to date concerning the mysteries of both
the large optical effects and the bonding mechanisms involved with in
tercalation in heavy metal iodide systems. Such a system exhibits unus
ual shifts of the optical band edge to higher energies upon intercalat
ion. The shift depends on which host-guest combination is used. Severa
l models have been developed to describe this system. The bonding mech
anism for this system is not clear because some data appear to support
a model based on a polarization interaction between the guest and hos
t material whereas other data support a charge transfer or quantum con
finement model. There appear to be several different systems being for
med by intercalation of the same substances that have different stoich
iometry. This riddle may be solved by investigations of the particular
methods of intercalation.