Scandinavian Working Papers in Economics
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Department of Economics, Uppsala University Working Paper Series, Department of Economics, Uppsala University

No 1997:1:
Time Consistent Matrimony with Endogenous Trust

Martin Dufwenberg ()

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; (follow links to similar papers)

JEL-Codes: C72; J12; (follow links to similar papers)

19 pages, December 30, 1996

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