Fairness and the Optimal Allocation of Ownership Rights
Abstract
We report on several experiments on the optimal allocation of ownership rights. The experiments confirm the property rights approach by showing that the ownership structure affects relationship-specific investments and that subjects attain the most efficient ownership allocation despite starting from different initial conditions. However, in contrast to the property rights approach, the most efficient ownership structure is joint ownership. These results are neither consistent with the self-interest model nor with models that assume that all people behave fairly, but they can be explained by the theory of inequity aversion that focuses on the interaction between selfish and fair players.Download Info
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1467.Length:
Date of creation: 2005
Date of revision:
Handle: RePEc:ces:ceswps:_1467
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Keywords: ownership rights; double moral hazard; fairness; reciprocity; incomplete contracts;Other versions of this item:
- Ernst Fehr & Susanne Kremhelmer & Klaus M. Schmidt, 2008. "Fairness and the Optimal Allocation of Ownership Rights," Economic Journal, Royal Economic Society, vol. 118(531), pages 1262-1284, 08.
- Fehr, Ernst & Kremhelmer, Susanne & Schmidt, Klaus M., 2005. "Fairness and the Optimal Allocation of Ownership Rights," CEPR Discussion Papers 5369, C.E.P.R. Discussion Papers.
- Fehr, Ernst & Kremhelmer, Susanne & Schmidt, Klaus M., 2004. "Fairness and the Optimal Allocation of Ownership Rights," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 11, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Fehr, Ernst & Kremhelmer, Susanne & Schmidt, Klaus M., 2005. "Fairness and the Optimal Allocation of Ownership Rights," Discussion Papers in Economics 727, University of Munich, Department of Economics.
- Ernst Fehr & Susanne Kremhelmer & Klaus M. Schmidt, . "Fairness and the Optimal Allocation of Ownership Rights," IEW - Working Papers 224, Institute for Empirical Research in Economics - University of Zurich.
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-13 (All new papers)
- NEP-BEC-2005-08-13 (Business Economics)
- NEP-CBE-2005-08-13 (Cognitive & Behavioural Economics)
- NEP-EXP-2005-08-13 (Experimental Economics)
- NEP-SOC-2005-08-13 (Social Norms & Social Capital)
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