Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Burdett and Celee (2001) present a model in which individuals can invest in their charm in order to Change their marriage class. The model suggests

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
Burdett and Celee (2001) present a model in which individuals can invest in their \"charm\" in order to Change their marriage class. The model suggests two equilibria, either everyone self-improves or nobody self-improves.Individuals do not take into account that self-improvement creates utility for a future partner and thus an underinvest- ment externality may arise.Self improvement can give rise to a desertion externality. People who before selfimprovement would have been accept- able partners may now be rejected by selfirnprovers. The Scottish equilibrium induces social welfare losses due to desertion externalities

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Advanced Macroeconomic Theory

Authors: Ola Olsson ]

1st Edition

9780415685085

More Books

Students also viewed these Economics questions

Question

Always have the dignity of the other or others as a backdrop.

Answered: 1 week ago