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Incentives to cooperate and the discretionary power of courts in divorce law

  • Bruno Deffains

    ()

  • Eric Langlais

In this paper, we study how the uncertainty in the behavior of judges provides parents going to separate with incentives to cooperate. We introduce a model of cooperative bargaining to describe the behavior of parents whose preferences satisfy the characterization of risk averse/pessimistic types proposed by Yaari (1987, Econometrica, 55, 95–116) in his Dual Decision Theory under Risk. The behavior of the judge is modeled in a simple manner: he is either supposed to follow a strict rule (we will say that he uses an imperative scale of alimony), or he may use discretion (he uses an indicative scale of alimony). The point is that for both parents the judgment represents an external opportunity to divorce—the disagreement point in negotiation. We show that the effective decision of parents (cooperation versus trial) depends on the specific structure of the costs and risks associated with divorce procedures, such that more uncertainty at trial increases the incentives to cooperate for risk averse parents. Finally, we give a characterization of the optimal degree of the judges’ discretionary power required to maximize the parents’ gains from negotiation. Copyright Springer Science+Business Media, LLC 2006

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File URL: http://hdl.handle.net/10.1007/s11150-006-0009-0
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Article provided by Springer in its journal Review of Economics of the Household.

Volume (Year): 4 (2006)
Issue (Month): 4 (December)
Pages: 423-439

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Handle: RePEc:kap:reveho:v:4:y:2006:i:4:p:423-439
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=109451

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  1. Kaplow, Louis, 1995. "A Model of the Optimal Complexity of Legal Rules," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 150-63, April.
  2. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
  3. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  4. Landes, William M, 1971. "An Economic Analysis of the Courts," Journal of Law and Economics, University of Chicago Press, vol. 14(1), pages 61-107, April.
  5. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, June.
  6. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
  7. Stéphane Mechoulan, 2005. "“Economic Theory’s Stance On No-Fault Divorce”," Review of Economics of the Household, Springer, vol. 3(3), pages 337-359, 09.
  8. Wakker, Peter & Tversky, Amos, 1993. " An Axiomatization of Cumulative Prospect Theory," Journal of Risk and Uncertainty, Springer, vol. 7(2), pages 147-75, October.
  9. Daniela Del Boca & Rocio Ribero, 2003. "Visitations and Transfers After Divorce," Review of Economics of the Household, Springer, vol. 1(3), pages 187-204, September.
  10. Viscusi, W Kip, 2001. "Jurors, Judges, and the Mistreatment of Risk by the Courts," The Journal of Legal Studies, University of Chicago Press, vol. 30(1), pages 107-42, January.
  11. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
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