Old money, the nouveaux riches and Brunhilde’s marriage strategy

Abstract

In a courtship game, wasteful conspicuous spending may provide information about some components of a suitor’s income. But conspicuous spending may be costly not only for the potential husband but also for the woman: it reduces the wealth of the man she may marry. In the optimal contractual arrangement, the bride’s cost moderates the threshold value of the conspicuous spending that she requires for marriage. We also find that a sound observable financial background (‘old money’) benefits both the suitor and the woman, and reduces wasteful spending on status goods. Furthermore, we analyze how a change in the intensity with which the suitor seeks the woman may affect the equilibrium pattern of conspicuous spending.