Old money, the nouveaux riches and Brunhilde’s marriage strategy

Abstract

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Until Taxes Do Us Part: Tax Penalties or Bonuses and the Marriage Decision

“…For any given U S one can thus find levels of B for which (4) is satisfied. If this can be done without violating (6) then the bonus induces a separating equilibrium and thus enables information transmission. Now the sign of the distortion is as expected (a bonus produces more marriages), and the marriage bonus impacts on the marriage decision in such a way that welfare increases.…”

“…Signaling in the marriage market has been analyzed as a mean to overcome asymmetric information and allow profitable matching. However, earlier studies emphasize the role of status goods and conspicuous consumption as signals of income, which represents a crucial but unobservable characteristic evaluated by potential partners (see De Fraja 2009, Bronsert et al 2016, and references within). 5 Our signaling model has a different focus.…”

Until Taxes Do Us Part: Tax Penalties or Bonuses and the Marriage Decision

“…Sam (S) and Robin (R), any gender, are two potential partners who interact strategically. 6 Sam's unobservable feelings for Robin are represented by the parameter θ S ∈ {θ L , θ H } with θ H > θ L > 0. With probability λ Sam's love is strong (θ S = θ H ), with probability 1 − λ it is weak (θ S = θ L ).…”

Until Taxes Do Us Part: Tax Penalties or Bonuses and the Marriage Decision

“…Consequently, Robin prefers tion and survival. Bronsert et al (2016) present a model where a woman interested in the wealth of a potential husband designs a screening mechanism by assigning a probability of marriage to possible amounts of wasteful consumption. Hence, screening leads to status consumption and wasteful gift giving.…”

“…Hence, screening leads to status consumption and wasteful gift giving. 6 As illustrated by the choice of the player's name our game is meant to represent the proposal game of any pair of potential partners irrespective of their gender. This gender neutrality is implicit in all our arguments even though we often refer to Sam as "he" and Robin as "she".…”