Marriage, Divorce, and Asymmetric Information

45 Pages Posted: 29 Oct 2014

See all articles by Leora Friedberg

Leora Friedberg

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

Steven N. Stern

Stony Brooke University

Date Written: November 2014

Abstract

We use data on people's valuations of options outside marriage and beliefs about spouses' options. The data demonstrate that, in some couples, one spouse would be happier and the other spouse unhappier outside of some marriages, suggesting that bargaining takes place and that spouses have private information. We estimate a bargaining model with interdependent utility that quantifies the resulting inefficiencies. Our results show that people forgo some utility in order to make their spouses better off and, in doing so, offset much of the inefficiency generated by their imperfect knowledge. Thus, we find evidence of asymmetric information and interdependent utility in marriage.

Suggested Citation

Friedberg, Leora and Stern, Steven N., Marriage, Divorce, and Asymmetric Information (November 2014). International Economic Review, Vol. 55, Issue 4, pp. 1155-1199, 2014. Available at SSRN: https://ssrn.com/abstract=2516101 or http://dx.doi.org/10.1111/iere.12086

Leora Friedberg (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3225 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Steven N. Stern

Stony Brooke University

Melville Library N4004
Stony Brook, NY 11794-3384
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
292
PlumX Metrics