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Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining

  • Saku Aura

    (University of Missouri)

This paper studies a married couple's dynamic investment and consumption choices under the assumption that the couple cannot commit across time not to renegotiate their decisions. The inefficiencies that can arise are characterized. Efficiency properties of different divorce asset- division regimes are examined. A stylized common-law regime is shown to lead to fully efficient outcome in a simple model while it is shown that under a community-property regime the couple is unlikely to attain full efficiency. The effect of the inability to commit across time on the savings level is examined under a tractable special case of the model.

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Paper provided by EconWPA in its series Microeconomics with number 0304002.

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Length: 31 pages
Date of creation: 04 Apr 2003
Date of revision:
Handle: RePEc:wpa:wuwpmi:0304002
Note: Type of Document - PDF; prepared on PC; pages: 31; figures: none
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  1. Saku Aura, 2002. "Does the Balance of Power Within a Family Matter? The Case of the Retirement Equity Act," CESifo Working Paper Series 734, CESifo Group Munich.
  2. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
  3. Dnes, Antony W., 1999. "Applications of economic analysis to marital law: concerning a proposal to reform the discretionary approach to the division of marital assets in England and Wales," International Review of Law and Economics, Elsevier, vol. 19(4), pages 533-552, December.
  4. Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 1998. "Mutual Insurance, Individual Savings and Limited Commitment," Keele Department of Economics Discussion Papers (1995-2001) 98/14, Department of Economics, Keele University.
  5. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
  6. Martin Browning, 1994. "The Saving Behaviour of a Two Person Household," Department of Economics Working Papers 1994-01, McMaster University.
  7. Shelly Lundberg & Jennifer Ward-Batts, 2000. "Saving for Retirement: Household Bargaining and Household Net Worth," Discussion Papers in Economics at the University of Washington 0026, Department of Economics at the University of Washington.
  8. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  9. Shelly Lundberg & Richard Startz & Steven Stillman, 2001. "The Retirement-Consumption Puzzle: A Marital Bargaining Approach," Working Papers 01-04, RAND Corporation Publications Department.
  10. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
  11. repec:bla:restud:v:74:y:2007:i:3:p:857-895 is not listed on IDEAS
  12. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Working Papers 94-6, University of Washington, Department of Economics.
  13. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
  14. Maurizio Mazzocco, 2007. "Household Intertemporal Behaviour: A Collective Characterization and a Test of Commitment," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 857-895.
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