Between Calm and Passion: The Cooling-Off Period and Divorce Decisions in Korea

Research in behavioral economics suggests that a cooling-off period can address decision-making errors caused by projection bias, which drives people to make the wrong prediction when affected by an immediate emotional state. Using the unique, natural experiment of a mandated divorce cooling-off period in Korea, a difference-in-differences (DD) estimation of the impact of such a cooling-off period on divorce outcomes shows that the cooling-off period increases filing cancellation and reduces finalized divorce rates without any effect on initial divorce filing rates. Estimates indicate that the number of divorces finalized decreases by approximately 9 percent, and that this effect is consistent over the long run. Research also shows that couples who have undergone a prior separation period or have conclusive causes to divorce do not respond to the cooling-off period, suggesting that emotional state at the time of decision is the driving force of observed dynamic inconsistency.