Should we write prenuptial contracts?

Helmut Rainer

    Research output: Contribution to journalArticlepeer-review

    23 Citations (Scopus)

    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. (c) 2006 Elsevier B.V. All rights reserved.

    Original languageEnglish
    Pages (from-to)337-363
    Number of pages27
    JournalEuropean Economic Review
    Volume51
    Issue number2
    DOIs
    Publication statusPublished - Feb 2007

    Keywords

    • asset division
    • terms of divorce
    • marriage contracts
    • marital investments and negotiations
    • PROPERTY-RIGHTS
    • DIVORCE
    • MARRIAGE
    • LABOR
    • FIRM
    • LAW
    • OWNERSHIP
    • HIM

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