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The Pre-Marital Investment Game

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  • Peters, Michael

Abstract

Two sides of a finite marriage market engage in costly investment and are then matched assortatively. The purpose of the investment is solely to improve the quality of the match that trader can attain in the second stage. The paper studies the limits of equilibrium of these finite matching games as the number of traders gets large. It is shown that mixed Nash equilibria in the finite games converge to degenerate pure strategy equilibria in the limit in which both sides of the market invest too much.

Suggested Citation

  • Peters, Michael, 2004. "The Pre-Marital Investment Game," Microeconomics.ca working papers peters-04-02-18-01-42-09, Vancouver School of Economics, revised 13 Sep 2006.
    • Handle: RePEc:ubc:pmicro:peters-04-02-18-01-42-09
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    File URL: http://microeconomics.ca/michael_peters/matching_limit_sim.pdf
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    References listed on IDEAS

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    1. Cole, Harold L. & Mailath, George J. & Postlewaite, Andrew, 2001. "Efficient Non-Contractible Investments in Large Economies," Journal of Economic Theory, Elsevier, vol. 101(2), pages 333-373, December.
    2. 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, April.
    3. Nosaka, Hiromi, 2007. "Specialization and competition in marriage models," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 104-119, May.
    4. Jeremy Bulow & Jonathan Levin, 2006. "Matching and Price Competition," American Economic Review, American Economic Association, vol. 96(3), pages 652-668, June.
    5. Philip J. Reny, 1999. "On the Existence of Pure and Mixed Strategy Nash Equilibria in Discontinuous Games," Econometrica, Econometric Society, vol. 67(5), pages 1029-1056, September.
    6. Michael Peters & Aloysius Siow, 2002. "Competing Premarital Investments," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 592-608, June.
    7. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    8. Shi, Shouyong, 2001. "Frictional Assignment. I. Efficiency," Journal of Economic Theory, Elsevier, vol. 98(2), pages 232-260, June.
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    Cited by:

    1. Georg Nöldeke & Larry Samuelson, 2015. "Investment and Competitive Matching," Econometrica, Econometric Society, vol. 83(3), pages 835-896, May.
    2. Raphaela Hyee, 2011. "Education in a Marriage Market Model without Commitment," Working Papers 683, Queen Mary University of London, School of Economics and Finance.
    3. V. Bhaskar & Ed Hopkins, 2016. "Marriage as a Rat Race: Noisy Premarital Investments with Assortative Matching," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 992-1045.
    4. Allison, Blake A. & Bagh, Adib & Lepore, Jason J., 2022. "Invariant equilibria and classes of equivalent games," Games and Economic Behavior, Elsevier, vol. 132(C), pages 448-462.
    5. Casari, Marco & Lisciandra, Maurizio, 2015. "Gender Discrimination and Common Property Resources," IZA Discussion Papers 9601, Institute of Labor Economics (IZA).
    6. Giacomo Calzolari & Leonardo Felli & Johannes Koenen & Giancarlo Spagnolo & Konrad O. Stahl, 2019. "Trust, investment and competition: theory and evidence from German car manufacturers," CESifo Working Paper Series 7680, CESifo.
    7. Aner Sela, 2020. "Two-Stage Matching Contests," Working Papers 2005, Ben-Gurion University of the Negev, Department of Economics.
    8. Raphaela Hyee, 2011. "Education in a Marriage Market Model without Commitment," Working Papers 683, Queen Mary University of London, School of Economics and Finance.
    9. Leonardo Felli & Kevin Roberts, 2016. "Does Competition Solve the Hold-up Problem?," Economica, London School of Economics and Political Science, vol. 83(329), pages 172-200, January.
    10. Dizdar, Deniz & Moldovanu, Benny & Szech, Nora, 2019. "The feedback effect in two-sided markets with bilateral investments," Journal of Economic Theory, Elsevier, vol. 182(C), pages 106-142.
    11. Aner Sela, 2023. "All-pay matching contests," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(2), pages 587-606, June.
    12. Spagnolo, Giancarlo & Calzolari, Giacomo & Felli, Leonardo & Koenen, Johannes & Stahl, Konrad, 2017. "Relational Contracts, Competition and Innovation: Theory and Evidence from German Car Manufacturers," CEPR Discussion Papers 12267, C.E.P.R. Discussion Papers.
    13. Chen Cohen & Ishay Rabi & Aner Sela, 2022. "Assortative Matching by Lottery Contests," Games, MDPI, vol. 13(5), pages 1-20, September.
    14. Dizdar, Deniz & Moldovanu, Benny & Szech, Nora, 2017. "The multiplier effect in two-sided markets with bilateral investments," Working Paper Series in Economics 109, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    15. Bilancini, Ennio & Boncinelli, Leonardo, 2014. "Instrumental cardinal concerns for social status in two-sided matching with non-transferable utility," European Economic Review, Elsevier, vol. 67(C), pages 174-189.
    16. 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, April.
    17. Boudreau, James W., 2010. "Stratification and growth in agent-based matching markets," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 168-179, August.
    18. James W. Boudreau, 2008. "Sequential Pre-Marital Investment Games: Implications for Unemployment," Working papers 2008-45, University of Connecticut, Department of Economics.
    19. Tom Truyts, 2010. "Social Status In Economic Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 137-169, February.
    20. Chen Cohen & Ishay Rabi & Aner Sela, 2020. "Assortative Matching Contests," Working Papers 2004, Ben-Gurion University of the Negev, Department of Economics.
    21. Casari, Marco & Lisciandra, Maurizio, 2014. "Gender Discrimination and Common Property Resources: a Model," MPRA Paper 57712, University Library of Munich, Germany.
    22. Bjerk, David, 2009. "Beauty vs. earnings: Gender differences in earnings and priorities over spousal characteristics in a matching model," Journal of Economic Behavior & Organization, Elsevier, vol. 69(3), pages 248-259, March.
    23. You, Jing & Yi, Xuejie & Chen, Meng, 2016. "Love, Life, and “Leftover Ladies” in Urban China," MPRA Paper 70494, University Library of Munich, Germany.

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    More about this item

    Keywords

    human capital; pre-marital investment; assortative matching;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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