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Should We Write Prenuptial Contracts?

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  • Helmut Rainer

Abstract

A successful marriage requires for both parties to make investments in their relationship and marital assets. How such assets would be divided if and when the parties divorce is an important factor determining each party’s (exante) investment incentives. Using the “incomplete contracting” approach, we characterize the optimal asset division rule, one that provides the parties with the best investment incentives. We then discuss the circumstances under which the spouses would agree, in equilibrium, to write a prenuptial contract with this asset division rule. We conclude by exploring the implications of our results in the context of various asset division rules currently discussed by policy-makers.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Helmut Rainer, 2005. "Should We Write Prenuptial Contracts?," Discussion Paper Series, School of Economics and Finance 200514, School of Economics and Finance, University of St Andrews.
  • Handle: RePEc:san:wpecon:0514
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    File URL: http://www.st-andrews.ac.uk/~wwwecon/papers/dp0514.pdf
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    More about this item

    Keywords

    Asset Division; Terms of Divorce; Marriage Contracts; Marital Investments and Negotiations.;
    All these keywords.

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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