Alice and Ben are married. Alice derives a payoff of 3 from marriage and Ben derives 5.
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Question:
Alice and Ben are married. Alice derives a payoff of 3 from marriage and Ben derives 5. If they are divorced, Alice's payoff would be reduced to -1, while Ben's payoff would be 7. Under the unilateral divorce law, what is the equilibrium outcome of the marriage?
Question 25 options:
a)Divorce; there will be transfers between the spouses
b)Divorce; no transfer between the spouses.
c)Not divorce; no transfer between the spouses
d)Not divorce; there will be transfers between the spouses
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