 To Tie the Knot or NotPadma Rao Sahib and
Xinhua Gu
Demographic Research, 2002, vol. 6, issue 13, 355-382 Abstract: 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. Keywords: risk; class partition; stochastic dominance; cohabitation; marriage; risk aversion (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:dem:demres:v:6:y:2002:i:13 Access Statistics for this article More articles in Demographic Research from Max Planck Institute for Demographic Research, Rostock, Germany |
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