Intrafamily bargaining and love

Man Si ()

Review of Economics of the Household, 2015, vol. 13, issue 4, 789 pages

Abstract: Popular culture and common wisdom testify that the way partners in a relationship feel for one another very much depends on how they treat each other. This paper posits the hypothesis that altruism or love in a relationship is endogenous to the actions of the partners and studies how this influences allocations and efficiency in a bargaining model of household decision-making. The main results are that agents treat their partner in a kinder way than without endogenously evolving love, this leads to more equitable allocations in household decision making and greater intertemporal efficiency. There are two mechanisms at work: agents treat their partner nicely to avoid retribution by a less loving partner in the future; and they treat the partner nicely so that the kind reciprocal behavior raises their own love towards the partner, which lets them enjoy higher utility. As to love, two interpretations emerge: love is a commitment device by which couples can implement Pareto superior allocations; and love is an investment good in the sense that costly nice behavior towards the partner today may ensure higher levels of trust and efficiency in the future. Copyright Springer Science+Business Media New York 2015

Keywords: Family economics; Household bargaining; Altruism; Love; Bargaining power; Commitment; C78; D13; D64; J12 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11150-014-9241-1

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