Essays on Household Behavior Under Limited Commitment

This thesis examines how marriage, divorce, and household decision-making interact with economic conditions, individual characteristics, and expectations. Across three chapters, I study the determinants and consequences of marital stability using collective household models with limited commitment, combining structural modeling with empirical evidence. The first chapter shows that house price shocks increase divorce risk and shape household labor supply, with leverage ratios amplifying the effects; neglecting divorce and bargaining channels leads to biased welfare assessments of housing and credit-market policies. The second chapter explores how personality traits affect specialization, joint consumption, and bargaining within marriage, using data from the HILDA Survey and a structural model of endogenous marriage and divorce. The third chapter tests the standard assumption that spouses hold accurate beliefs about marital stability. I show that divorce risk is systematically mispriced, and that optimistic beliefs distort fertility timing, labor supply, and lifetime earnings. A policy experiment with divorce-contingent insurance suggests that correcting belief-driven mispricing improves household outcomes without reducing fertility. Together, these studies highlight the importance of incorporating marital instability, bargaining frictions, and expectations into the analysis of household behavior and policy design.