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Marriage as a Rat Race: Noisy Pre-Marital Investments with Assortative Matching

We study the incentive to invest to improve marriage prospects, in a frictionless marriage market with non-transferable utility. Stochastic returns to investment eliminate the multiplicity of equilibria in models with deterministic returns, and a unique equilibrium exists under reasonable conditions. Equilibrium investment is efficient when the sexes are symmetric. However, when there is any asymmetry, including an unbalanced sex ratio, investments are generically excessive. For example, if there is an excess of boys, then there is parental over-investment in boys and under-investment in girls, and total investment will be excessive.

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File URL: http://www.econ.ed.ac.uk/papers/parental-inv-9august11-a4.pdf
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Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 210.

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Length: 36
Date of creation: 09 Aug 2011
Date of revision:
Handle: RePEc:edn:esedps:210
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  1. Shang-Jin Wei & Xiaobo Zhang, 2011. "Sex Ratios, Entrepreneurship, and Economic Growth in the People's Republic of China," NBER Working Papers 16800, National Bureau of Economic Research, Inc.
  2. Michael Peters & Aloysius Siow, 2000. "Competing Pre-marital Investments," Working Papers peters-00-01, University of Toronto, Department of Economics.
  3. Ed Hopkins & Tatiana Kornienko, 2004. "Running to Keep in the Same Place: Consumer Choice as a Game of Status," American Economic Review, American Economic Association, vol. 94(4), pages 1085-1107, September.
  4. Pierre-Andre Chiappori & Yoram Weiss & Murat Iyigun & Yoram Weiss, 2006. "Investment in Schooling and the Marriage Market," 2006 Meeting Papers 43, Society for Economic Dynamics.
  5. Roger B. Myerson, 1994. "Population Uncertainty and Poisson Games," Discussion Papers 1102R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Hoppe, Heidrun C. & Moldovanu, Benny & Sela, Aner, 2006. "The Theory of Assortative Matching Based on Costly Signals," CEPR Discussion Papers 5543, C.E.P.R. Discussion Papers.
  7. repec:bla:restud:v:76:y:2009:i:1:p:253-281 is not listed on IDEAS
  8. V. Bhaskar, 2011. "Corrigendum: Sex Selection and Gender Balance," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 252-53, May.
  9. Iyigun, Murat & Walsh, Randall P., 2005. "Building the Family Nest: Pre-Marital Investments, Marriage Markets and Spousal Allocations," IZA Discussion Papers 1752, Institute for the Study of Labor (IZA).
  10. Gall, Thomas & Legros, Patrick & Newman, Andrew, 2012. "Mismatch, rematch, and investment," Discussion Paper Series In Economics And Econometrics 189, Economics Division, School of Social Sciences, University of Southampton.
  11. V. Bhaskar, 2011. "Sex Selection and Gender Balance," American Economic Journal: Microeconomics, American Economic Association, vol. 3(1), pages 214-44, February.
  12. Acemoglu, Daron & Shimer, Robert, 1999. "Holdups and Efficiency with Search Frictions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 827-49, November.
  13. Hopkins, Ed & Kornienko, Tatiana, 2008. "Which Inequality? The Inequality of Endowments Versus the Inequality of Rewards," SIRE Discussion Papers 2008-13, Scottish Institute for Research in Economics (SIRE).
  14. George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2010. ""Pricing and Investments in Matching Markets",Second Version," PIER Working Paper Archive 10-037, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 30 Nov 2010.
  15. Ed Hopkins, 2012. "Job Market Signaling Of Relative Position, Or Becker Married To Spence," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 290-322, 04.
  16. Peters, Michael, 2006. "Truncated Hedonic Equilibrium," Microeconomics.ca working papers peters-06-04-11-02-42-39, Vancouver School of Economics, revised 03 Mar 2009.
  17. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
  18. Peters, Michael, 2007. "The pre-marital investment game," Journal of Economic Theory, Elsevier, vol. 137(1), pages 186-213, November.
  19. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  20. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
  21. Burdett, Ken & Coles, Melvyn G, 2001. "Transplants and Implants: The Economics of Self-Improvement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 597-616, August.
  22. Murat Nick & P. Randall Walsh, 2007. "Building the Family Nest: Premarital Investments, Marriage Markets, and Spousal Allocations," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 507-535.
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