Konrad, Kai A.; Lommerud, Kjell Erik
The Bargaining Family Revisited.
In: Canadian Journal of Economics, Vol. 33, No. 2: pp. 471-487
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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. One finding is that overinvestment in education may be even more of a problem in such a semi-cooperative model than in a fully non-cooperative one. Even though both the semi-cooperative model and the fully non-cooperative model predict overinvestment in education, policy conclusions that follow from the two models are distinctly different.