Discussion paper
DP1312 The Bargaining Family Revisited
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.
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