Question

Briefly explain Stigler’s theory of information. Relate his theory to Becker’s theory of marriage and divorce

Answer 1

Stigler's most influential contribution to economic thought was his work on information theory. Reconciling the theory with the facts, Stigler investigated the importance of information. He explained why prices differ for identical goods. From his work many other theories are built to explain economic behaviour. Studies on decision making under uncertainty would not have progressed without understanding the role of information as put by Stigler. Stigler is best known for developing the economic theory of regulation also known as capture which says that interest groups and other political participants will use the regulatory and coercive powers of government to shape laws and regulation in a way that is beneficial to them. stigler's most important contribution to economics was published in his landmark articled economics of information. According to friedman stigler essentially created a new area of study for economists. stigler stressed the importance of information one should hardly have to tell academicians that information is valuable resource knowledge is Power and yet it occupies a slum dwelling in the towns of economics.

stigler's journey to the development of economic thought goes beyond the traditional issues of monopoly regulation and information. His swing of pendulum in economic regulation constitutes a great turnabout. He was also the one who started public choice study. Which assumes that government policy was driven by self-interest rather than a pure concern for the public's welfare. His view has become the mainstream. Stigler's vision on economic thought was path-breaking serving economic literature extraordinarily well

According to Backer marriages dissolve when the utility expected from staying married falls below the utility expected from divorce. The theory assumes that individuals maximize utilities from commodities they accept to consume in a lifetime ranking martial strategies by their full wealth and choosing the highest. Using a national probability sampling of husbands and wifes marry to one another in 1978 we explore the correlates of thinking about divorce in order to extent theory of Martial instability by adding sociological variables and measuring individual utilities. Wife thoughts of divorce increase with their work experience having a youngest child aged 6 to 11 and egalitarian housewife attitudes and decrease with age at marriage,martial duration and husbands house worker contribution. Husband thoughts of divorce increase with wife works experience and wife egalitarian housework attitudes and decrease with the presence of children under 6 martial duration and age difference. To the extent that thought of divorce relates to eventual divorce these findings imply the husband's earnings and the presence of children may deter divorce less now tthey have in the past.