DP1312 The Bargaining Family Revisited

Author(s):	Kai A. Konrad, Kjell Erik Lommerud
Publication Date:	January 1996
Keyword(s):	Education, Family Bargaining
JEL(s):	D13, J22, J24
Programme Areas:	Human Resources
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=1312

We suggest a family bargaining model where human capital investment decisions are made non-cooperatively in a first stage, while day-to-day allocation of time is determined later through Nash bargaining, but with non-cooperative behaviour as the fall back. Several authors have claimed that non-cooperative behaviour is a more appropriate fall back in family bargaining than utilities as single. We argue that the empirical implications of the two approaches are quite parallel. A second finding is that over-investment in education may be even more of a problem in our mixed cooperative-non-cooperative model than in a fully non-cooperative one.