Saturday, December 2, 2017

"Contracts and Trust"

From Elaine's Idle Mind, June 10, 2016:
Two nights ago, I was convinced to watch 50 Shades of Grey. Not the whole movie, thank god, just the contract negotiation scene.


I don’t get it, I said. Two adults are about to engage in sexual relations. Why do they need a contract? Don’t they trust each other? And if they don’t trust each other, why don’t they walk away?

The same question applies to pre-nups. Or even the institution of marriage! Unless one party poses a significant flight risk, why would willing participants need a legal contract to compel each other to stay?
To better understand this, let’s start with a simpler contract.

Loan contracts.
Suppose you apply for a mortgage with the best of intentions. The loan is approved thanks to your impeccable credit score and 10% down. It’s a large mortgage, but your salary is five times the monthly payment so you should pay it off no problem.

Fast-forward half a decade. The housing market has collapsed, your dog needs kidney dialysis, and to top it all off, a robot just took your job.
How motivated are you to continue paying that mortgage?

While you may be a trustworthy individual at time of loan application, it’s future-you that can’t be trusted. As long as the cost of defaulting on the contract (loss of home equity) is greater than the opportunity cost of mortgage payments, repayment can be coerced.
Much like a consumer loan agreement, marriage is an institution founded on mistrust. Sure, things are going great right now, but it is a cruel fact of nature that most humans do not age well.

What will compel you to stick around after she doubles in size and succumbs to the effects of gravity? And what happens after you become a balding couch ornament with the gut of a ruminant?

This is why marriage contracts were invented. Conjugal bliss can exist when both parties follow similar rates of decay, but this symmetry is rare. Discord arises when one party decays more rapidly than the other. Or, worse, when one party’s income substantially increases....MORE