Whereas the processes and mechanisms by which we get into and out of marriage have been compelling subjects for artists and philosophers for much of human history, only recently have economists turned their attention to these phenomena. Naturally, the economic approach has focused on the nature and outcomes of bargaining between potential spouses (prior to marriage) or actual spouses (during marriage or regarding divorce). This chapter endeavors to review the literature on such bargaining, concentrating on two issues: the nature of bargaining in each setting, and whether such bargaining leads to efficient outcomes. The chapter is organized in four main sections: section 1 analyzes bargaining underlying the formation of marriage; section 2 assesses bargaining within marriage; section 3 evaluates bargaining over divorce; and section 3 contains concluding thoughts.
Bargaining to form marriages
The analysis of bargaining in order to form a marriage has its origin as a type of assignment problem, as pioneered by Koopmans and Beckmann (1957). Becker (1973, 1974, 1991) was the first to apply this assignment model to marriages in which the division of marital output was endogenous. In Becker's model, bargaining leads to the simultaneous resolution of three questions regarding marriage: whether to marry, whom to marry, and how to divide the surplus from marriage.
As originally formulated, this bargaining involves no strategic behavior: individual payoffs, either from remaining single or from a particular marriage, are public information.