Sharing and choosing within the household : a survey

Overview & Synopsis

This paper attempts at providing a survey of the different models of individual decision making within the household. The first section reviews the traditional approach to household decision making and emphasize its weaknesses. In addition to the standard assumption of selfish agents, other behavioral hypotheses --caring à la Becker and altruism-- are examined. This naturally leads to some economic justifications of marriage formation and dissolution. Based on these analytical building blocks, the second section proposes a typology of bargaining models of intrahousehold decision making. A first dividing line distinguishes cooperative and non-cooperative models. However, most of the models are based on cooperation amongst members of the household. While some of the cooperative models rest on a particular bargaining rule, such as the Nash-bargaining one, the collective approach, which appears to be more general, focuses on Pareto-efficiency without assuming a specific bargaining rule. The third section briefly raises two sets of methodological issues: one about the heuristic relevance of the intrahousehold decision models, and the second one relating to the empirical difficulty due to the lack of observable data. The conclusion stresses the potential of microsimulation models for enlightening these difficult, but crucial issues.