Monday, April 2, 2012

Mawwiage Is What Bwings Us Togevver Today

The always-excellent Bryan Caplan makes some interesting points today on the liberalization of military labor contracts and the implications for other long-term contracture (specifically, marriage contracts, though one might imagine taking the notion further).

Part of my day job research interests deal with the intersection of military labor contracts and biased beliefs. If we look at arrangements like marriage or military service as a Bayesian process with quasi-predictable posterior nodes (that would be a good name for a band), contracts like the ones described by Caplan anticipate systematic regret. In the military, this could be the post-training blues; in married life, it could be the seven-year itch.

Interesting then the disparity. The lack of at-will employment in the Armed Services suggests acknowledgement of the non-euvoluntary nature of military service. Here however, simply voluntary is plenty to mollify the compassionem publica. Not so for marriage, it seems. The same arguments that would permit the DoD to enforce an enlistment contract would be thrown out of court on their ear were they presented before a family courts judge. I suspect the legal reasoning would pivot on the "good of the National Defense", and it's harder to make the case that marriage is a pure public good so there probably is at least some plausible logic behind the status quo ante, but it sure would be interesting to ceteris parebus see how intuitions over ex post regret vary from institution to institution. We bar Soldiers and Sailors from indulging regret, but not married couples. We bar students from indulging regret over borrowing to finance education (for the most part anyway--it's very difficult to dispose of student loan debt) though the US Treasury will underwrite large lending houses after the fact when they've made regrettable decisions.

How stable or unstable are intuitions about the role of regret when it comes to honoring contracts? Are people consistent in their reasoning? What is more important, protecting the rules of the game or bailing out losers? What is the role of ergodicity in bounding rationality? I will take this opportunity to reserve some thoughts on Armin Meiwes for a future post related to this topic.

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Do you have suggestions on where we could find more examples of this phenomenon?