Scandinavian Working Papers in Economics
Working Paper Series,
Uppsala University, Department of Economics
No 1997:1: Time Consistent Matrimony with Endogenous Trust
Martin Dufwenberg ()
Additional contact information
Martin Dufwenberg: Stockholm University, Postal: Department of Economics, SE-106 91 Stockholm, Sweden
Abstract: A simple model of marriage and divorce predicts that no marriages occur. Yet, in real life, people marry all the time in seemingly similar situations. This discordance is explained using psychological game theory. An emotional guilt effect is explicitly modeled and multiple belief-dependent equilibria become possible: some marriages don’t happen, some are formed but end in divorce, some last a lifetime. For certain parameterizations a lifelong efficient marriage is guaranteed; one spouse’s approval to marry signals a trust so strong as to force the other spouse to hold beliefs which make divorce exceedingly emotionally unattractive. These results may have some bearing also on other partnerships than marriage.
Keywords: Marriage; time consistency; emotions; guilt; psychological game theory
19 pages, December 30, 1996
Full text files
1997wp1.pdf
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