Working Paper Series, Department of Economics, Uppsala University
Time Consistent Matrimony with Endogenous Trust
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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