A Moral Hazard Model of Parental Care

Abstract

One perplexing observation is that although men and women have different comparative advantages, cooperation is often only seen during child-bearing and rearing periods. One interpretation is that the juvenile offspring serves as an indivisible public goods to facilitate cooperation between opposite sexes of adults. We show that moral hazard in maternal parental care will either force the father to pay the mother a rent in order to induce optimal care (when the child is of intrinsic high quality) or set the care level at second best (when the child is of intrinsic low quality). The implications of the model can be extended to many issues in the family economics such as increasing divorce rate, pros and cons of monogamy versus polygyny, and evolving gender roles in human society etc.