Long Term Contracts:Family Law Why Have Long-term Contracts? Why not handle everything as a spot market? In some relationships,partners acquire relationship specific skills Converting a competitive market to a bilateral monopoly The case for traditional marriage Eliminating the option of threatening to leave reduces some bargaining costs Social customs on the division of responsibilities reduces others At the risk of being stuck with a wrong choice or a wrong division And you cannot enforce contract terms that are not observableLong Term Contracts: Family Law • Why Have Long-term Contracts? • Why not handle everything as a spot market? • In some relationships, partners acquire relationship specific skills • Converting a competitive market to a bilateral monopoly • The case for traditional marriage • Eliminating the option of threatening to leave reduces some bargaining costs • Social customs on the division of responsibilities reduces others • At the risk of being stuck with a wrong choice or a wrong division • And you cannot enforce contract terms that are not observable