Thursday, July 5, 2007

On the economics of adultery

Free exchange brings forth this economic puzzle:

The Adultery Puzzle

Why hasn't the lemons problem killed adultery? To be more specific, why would any women want to steal a man who lies to, cheats on, and then dumps his wife? This is particularly clear in Woody Allen's Match Point - the mistress angrily insists that her boyfriend leave his wife, even though he's shown her in a hundred ways that he's a lying, cheating parasite.

In the actual market for used cars, of course, the markets has largely solved the lemons problems using reputation, inspection, and warrantees. You don't want to sell low-quality products if it will ruin your firm's reputation, if they have to pass inspection first, or if a dissatisfied customer can return the product and get his money back. But it's hard to see that mistresses can rely on any of these mechanisms. Few adulterers build up a reputation for standing by their mistresses. Most adulterers wouldn't pass inspection. And I've never heard of an adulterer giving a credible money-back guarantee ("If I don't leave my wife within a year, you get a full year of your life back!"). So what's the point of stealing another woman's man, if you can only steal the bad ones?

The adultery puzzle doesn't seem like a case of a lemon market to me; perhaps it's a false analogy. There's asymmetry of information between buyer and seller in a lemons market, but how much asymmetry is there between the adulterous male and the family breaker? Not too much. First, the adulterous guy has already committed to some extent to her, since, in most cases, she could have acquired enough information to break up the marriage. Moreover, does he really know what he is up to? In many of these cases people may find themselves in the Jekyll and Hyde situation, like, as Schelling put it, the smoker that destroys the last pack of cigarettes in the middle of the night, then goes insanely craving for more, then throws the car keys on the dark garden so he can't buy some more at least during the night, only to get his flashlights the next minute.

Perhaps many adulterous folk out there are constantly going back and forth between their luscious dreams and thoughts of the kids and the house and lifelong commitments. When this is the case, the adulterous guy may not even know what is going to happen; how things will turn out in the end; for his own control of the situation is in doubt, just like the addicted drug user can't really tell if he'll recover. For cases like this, there should not be asymmetry of information between "buyer and seller", thus it's not really a lemon case.

When it is indeed a lemon case (i.e., the guy clearly has no intention of leaving, and is under perfect control of his feelings and actions), my guess would be that there would also be large asymmetry of resources, and that some naughty girl out there is getting little gifts every single week. The guy is a lemon, but turns out to "tell her" that fact, by subtly and constantly bribing her way into silence (these presents have, in fact, been documented in studies--though I've never seen a study relating asymmetry of resources and lemon-ness--however that might be measurable). In this case, again, there's no asymmetry of information. Even the real lemons do not apply to the "lemon problem", as asymmetry of information is not a key driving factor behind the transaction.

Finally, being "a lying, cheating parasite" is not an absolute all-or-none proposition, but really a function of one's current state of affairs. They guy that lies and cheats to girl X might actually turn out to be not a monster in another relationship--and here's a true motive for the "family breaker". Carl Sagan and Ann Druyann, according to his biographers, have lived a Cinderella story after both left their original marriages. Perhaps these stories fuel some girls to go after committed man.

I wonder why Free Exchange didn't mention the fact that women will also philander.