Marital investments, time consistency and emotions

Research output: Contribution to journalArticlepeer-review

50 Scopus citations

Abstract

A benchmark model of a married couple's educational investment yields an inefficient outcome due to the possibility of opportunistic divorce. Motivated by findings in social psychology, I use psychological game theory to incorporate belief-dependent guilt feelings. Multiple equilibria become possible. Some marriages have inefficient under-investment. Some have efficient outcomes and preclude divorce. If guilt is sufficiently important, a life-long efficient marriage is implied because a spouse may signal a trust so strong as to force the partner to hold beliefs that make divorce unattractive.

Original languageEnglish (US)
Pages (from-to)57-69
Number of pages13
JournalJournal of Economic Behavior and Organization
Volume48
Issue number1
DOIs
StatePublished - 2002

Keywords

  • Divorce
  • Emotions
  • Forward induction
  • Guilt
  • Marital investment
  • Marriage
  • Psychological game theory
  • Time consistency
  • Trust

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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