TITLE:
Elective Affinities
AUTHORS:
Daniela Di Cagno, Emanuela Sciubba, Marco Spallone
KEYWORDS:
Marriage Model, Risk Aversion
JOURNAL NAME:
Theoretical Economics Letters,
Vol.1 No.3,
November
7,
2011
ABSTRACT: We propose a marriage model where assortative matching results in equilibrium for reasons other than those driving similar results in the search and matching literature. A marriage is a joint venture where husband and wife contribute to the couple’s welfare by allocating their time to portfolios of risky activities. Men and women are characterised by different preferences over risk and the optimal match is between partners with the same level of risk aversion. In our model no two men (women) rank the same woman (men) as most desirable. Given that there is no unanimous ranking of candidates, everyone marries in equilibrium their most preferred partner.