To Tie the Knot or Not
This paper introduces imperfect information, learning, and risk aversion in a two sided matching model. The model provides a theoretical framework for the commonly occurring phenomenon of cohabitation followed by marriage, and is consistent with empirical findings on these institutions. The paper ha...
| Format: | Article |
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| Language: | English |
| Published: |
Max Planck Institute for Demographic Research
2002-05-01
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| Series: | Demographic Research |
| Subjects: | |
| Online Access: | http://www.demographic-research.org/volumes/vol6/13/ |
| _version_ | 1818523584738361344 |
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| collection | DOAJ |
| description | This paper introduces imperfect information, learning, and risk aversion in a two sided matching model. The model provides a theoretical framework for the commonly occurring phenomenon of cohabitation followed by marriage, and is consistent with empirical findings on these institutions. The paper has three major results. First, individuals set higher standards for marriage than for cohabitation. When the true worth of a cohabiting partner is revealed, some cohabiting unions are converted into marriage while others are not. Second, individuals cohabit within classes. Third, the premium that compensates individuals for the higher risk involved in marriage over a cohabiting partnership is derived. This premium can be decomposed into two parts. The first part is a function of the individual's level of risk aversion, while the second part is a function of the difference in risk between marriage and cohabitation. |
| first_indexed | 2024-12-11T05:46:41Z |
| format | Article |
| id | doaj.art-5c8e07ddb00c43fbacf8491144da5037 |
| institution | Directory Open Access Journal |
| issn | 1435-9871 |
| language | English |
| last_indexed | 2024-12-11T05:46:41Z |
| publishDate | 2002-05-01 |
| publisher | Max Planck Institute for Demographic Research |
| record_format | Article |
| series | Demographic Research |
| spelling | doaj.art-5c8e07ddb00c43fbacf8491144da50372022-12-22T01:18:57ZengMax Planck Institute for Demographic ResearchDemographic Research1435-98712002-05-01613To Tie the Knot or NotThis paper introduces imperfect information, learning, and risk aversion in a two sided matching model. The model provides a theoretical framework for the commonly occurring phenomenon of cohabitation followed by marriage, and is consistent with empirical findings on these institutions. The paper has three major results. First, individuals set higher standards for marriage than for cohabitation. When the true worth of a cohabiting partner is revealed, some cohabiting unions are converted into marriage while others are not. Second, individuals cohabit within classes. Third, the premium that compensates individuals for the higher risk involved in marriage over a cohabiting partnership is derived. This premium can be decomposed into two parts. The first part is a function of the individual's level of risk aversion, while the second part is a function of the difference in risk between marriage and cohabitation.http://www.demographic-research.org/volumes/vol6/13/risk |
| spellingShingle | To Tie the Knot or Not Demographic Research risk |
| title | To Tie the Knot or Not |
| title_full | To Tie the Knot or Not |
| title_fullStr | To Tie the Knot or Not |
| title_full_unstemmed | To Tie the Knot or Not |
| title_short | To Tie the Knot or Not |
| title_sort | to tie the knot or not |
| topic | risk |
| url | http://www.demographic-research.org/volumes/vol6/13/ |