in the eyes of parents likely diers from what is optimal to the son, even though parents are altruistic and care about the son's welfare. Thus, parent matchmaking carries an agency cost for the son, while it is at the same time a key instrument to ensure parental welfare as parents grow old.

Without search costs, the son would prefer self search to avoid the agency cost in parental matchmaking. However, parents and children dier in search costs. On one hand, parents may face higher search costs for love between the potential couple than the son. On the other hand, parents can have a wide access to potential candidates via their social networks. For instance, in places where parents are linked to a larger social network, search costs would be lower in parental matchmaking than in children's self search. Parental search can represent a greater advantage if parents are better at judging the candidate's character and earning ability. Thus, despite parental matching's agency cost, it sometimes could be optimal for the son to choose parental matchmaking because of the saving in search costs.

Other important reasons for parental matchmaking are culture, tradition and social support for the elderly. Throughout Chinese history (up to the early third of the 20th century), Chinese parents had a long tradition of parental control rights in children (Cheung, 1972).<sup>1</sup> In a traditional Chinese family, parents have authority over children even after they grow up, and they arrange children's marriages with some help from professional matchmakers. Thus, love marriage was an exception rather than the norm. Dramatic changes have occurred in the past century. Now in both urban and rural China, love marriage has become the norm. However, tradition still plays a powerful role, especially in rural China. Furthermore, only in the last ten years or so, rural households began to gain access to state-provided pension and health insurance. Adult children thus had been their primary source of old age support. The traditional norms, as well as the slow catch up of public support, help to explain why some parents still interfere heavily in the life of their adult children, and why lial piety (i.e., being respectful and obedient to parents) is still the key value in the Chinese family systems.

We incorporate both agency costs and search costs into a theoretical framework, and derive several testable implications. First, we predict that the love in a marriage should be lower for parents-involved matches than for self-matches. This is because parents value more than their son the monetary and household production components of his marriage, and they have a higher marginal cost in assessing love between their son and a potential daughter-in-law. Due to the agency cost, the overall marriage gain to the son, measured by love, income and household production but excluding search cost, would be lower under

> 1This paragraph draws from Cheung (1972), which provides an intuitive, comprehensive, and entertaining explanations of many traditional family institutions such as parental ownership of children, blind marriage, daughter-in-law raised from childhood, dowery, and so on.

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