Should we write prenuptial contracts?

Helmut Rainer

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: A successful marriage requires for both parties to make investments in their relationship and marital assets. How such assets would be divided if and when the parties divorce is an important factor determining each party’s ex ante investment incentives. Using the incomplete contracting approach, we characterize the optimal asset division rule, one that provides the parties with the best investment incentives. We then discuss the circumstances under which the spouses would agree, in equilibrium, to contract out state-imposed rules governing the allocation of marital assets upon divorce. We conclude by exploring the implications of our results in the context of various asset division rules currently discussed by policy-makers.

Date: 2007
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Citations: View citations in EconPapers (37)

Published in European Economic Review 2 51(2007): pp. 337-363

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Related works:
Journal Article: Should we write prenuptial contracts? (2007)
Working Paper: Should We Write Prenuptial Contracts? (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:19819

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