Marriage: The Ultimate Bargaining Game
Throughout any marriage there is continuing shifts in bargaining between spouses. The simple saying “I do” is just the beginning of the bargaining that arises within a marriage. By not viewing marriage as a binding agreement but instead a negotiation that can be broken depending on the value to each spouse, one can model the relationship and theoretically look at different possible outcomes. The main tool of bargaining power being divorcing and remarrying.
In Ted Bergstrom’s paper Marriage Markets and Bargaining Between Spouses he speaks precisely on this topic. Bergstrom discusses cooperative Nash bargaining solutions where the two options in marriage are staying married or being divorced. Those being the only two options in this modeling leads to the belief that the couple will work together to find a way out of their conflict since the only other option is unpleasant to both parties. This argument is continually added upon as different theories are proposed. Marriage cannot be simply viewed as either divorce or marriage. In some cases spouses remarry which may be more beneficial than the original marriage. On the other hand, divorce is not as simple as basic theories view it as. There may be a long-term loss in wages to your spouse once divorced. There are other theories in Bergstrom’s paper including Binmore’s with outside options and the Rubenstein model accounting for the feasibility of divorce.
This article is so captivating because of its application of theories learned in the course to most long term bargaining arrangement that can be made between two people. Analysis of marriage includes: Nash equilibriums of spouses bargaining, outside options within marriage, and the power of networks within mating. There are some any nuances to the topic that it can be continually analyzed by different theorists.
http://www.econ.ucsb.edu/~tedb/Family/fambarg.pdf