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Property division on divorce with inequity aversion

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  • Smith, Ian

Abstract

In the absence of transaction costs, the divorce decision is invariant to legal rules on post-divorce asset allocation. This article introduces a one-sided inequity aversion model to show that property division laws can have efficiency as well as distributive consequences. When divorce is a credible threat, aversion to inequity may prevent spouses renegotiating their marriage to avoid an inefficient marital dissolution. Contemporary trends towards greater equality in property division can be interpreted in terms of their beneficial efficiency effects in addition to standard distributive concerns.

Suggested Citation

  • Smith, Ian, 2007. "Property division on divorce with inequity aversion," International Review of Law and Economics, Elsevier, vol. 27(2), pages 111-128.
  • Handle: RePEc:eee:irlaec:v:27:y:2007:i:2:p:111-128
    DOI: 10.1016/j.irle.2007.06.006
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    Cited by:

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    2. Joni Hersch & Jennifer Bennett Shinall, 2020. "When equitable is not equal: experimental evidence on the division of marital assets in divorce," Review of Economics of the Household, Springer, vol. 18(3), pages 655-682, September.
    3. Andrea Gallice, 2012. "Strategic Announcements of Reference Points in Disputes and Litigations," Working papers 003, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    4. Mingzhi Hu & Wenping Ye, 2020. "Home Ownership and Subjective Wellbeing: A Perspective from Ownership Heterogeneity," Journal of Happiness Studies, Springer, vol. 21(3), pages 1059-1079, March.
    5. Linde, Jona & Sonnemans, Joep, 2015. "Decisions under risk in a social and individual context: The limits of social preferences?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 56(C), pages 62-71.

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    More about this item

    Keywords

    Property settlement; Divorce; Inequity aversion;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • K0 - Law and Economics - - General

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