Two-sided Matching, Who Marries Whom? And what Happens upon Divorce?

Abstract

Conventional two-sided matching game is a one-period game. In this note, we contribute to the existing literature by examining a multi-period two-sided matching problem allowing for the possibility of a divorce. We assume that the matching game is played repeatedly and the payoff matrix changes over time. It is shown that the rule of divorce will affect the equilibrium of a marriage game. An empirical implication of our result is that a country with a well-developed financial market will have a better marital outcome as compared to a less-developed country.