Abstract
Kinky Choices, Dictators and Split Might: A Non-Cooperative Model for Household Consumption and Labor Supply
Highlights
Common sense suggests that no two persons, and not one man and one woman, are alike
We prove that demand for public goods is defined by only three regimes
Either demand for public goods is solely determined by the preferences of one of the partners (Husband Dictatorship or Wife Dictatorship), or by the preferences of both spouses, who take into account each other’s contributions to public goods (Split Might)
Summary
Common sense suggests that no two persons, and not one man and one woman, are alike. A first aim of the current study is to fill this gap in our understanding by focusing on the private provision of public goods while taking into account labor supply decisions and the implied endogenous individual incomes We choose this non-cooperative setting because of scientific curiosity and because of its connection with the cooperative setting. The combination of assumptions 1 and 3 seems to imply that both partners participate in the labor market, as one obtains infinite utility from consuming some private goods and as labor income is the only resource available to pay for these private goods It is, still possible to capture non-participation (of either partner) in the labor market: If all goods are public and there are no private goods other than leisure (as in the empirical application; see Section 3) non-participation arises for a range of positive wage rates. One always starts with HD (for low ρ and a wife who does not participate to the labor market) and ends up with WD (for high ρ and a working wife)
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