I. Suppose we shift from a system where divorce occurs only by mutual consent to a a system of unilateral divorce--either party can walk out of the marriage without penalty.
A. What are the short run distributional consequences--who is worse off or better off as a result of the change? Explain.B. What are the long run allocational consequences--how do people adjust their behavior in response to the change? Explain.
C. Are the consequences described in either A or B inefficient--do they represent an economic worsening (the opposite of an improvement)? Explain.
II. What are the problems with each of the following rules for divorce.
A. On demand, by either party, with no penalty.B. On demand, with a large penalty paid by the breaching party to the other party.
C. No divorce, ever.
D. Divorce only by mutual consent.