Tuesday, May 22, 2007
The Fair model is pretty well-known, and a couple of recent re-tests have turned some of the results into questions. Fair found, for instance, that infidelity increased over time in the marriage, but recent results do not support that. Harford's surmise, that "you know whether your husband is likely to become more or less tedious over time" is supported by that. But age does matter, at least in this paper up to a point: The probability of a man cheating on his marriage peaks at age 55, but for women the peak is 40. Most importantly, education matters but in a very economic way. If your spouse is much less educated than you are, you're more likely to be unfaithful to the marriage. "[T]he costs of infidelity increases as the quality of the spouse increases." But of course.
When I heard of your dilemma I thought immediately of an old paper from the Journal of Political Economy, �A Theory of Extramarital Affairs� by Ray C. Fair, an economist at Yale.
...[H]is approach to the problem could equally have applied if you had written to say that you were 38 years old, rather bored with your husband and were thinking of taking up badminton. One senses that something is missing. I think the omission is uncertainty. You do not know how much fun an affair will be. Nor do you know whether your husband is likely to become more or less tedious over time. A cost-benefit analysis is going to be tricky, but we can say for sure that your potential affair represents a valuable option. As with all options it may be best to refrain from exercising it until the option is �deep in the money� - that is, until you are so thoroughly fed up with your husband that you think nothing can save the marriage.
Until then, why not enjoy the saucy talk? It may be a lot more fun than the affair itself.
Here's the wiki on option time value.