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Exchange, theft, and the social formation of property

  • Kimbrough, Erik O.
  • Smith, Vernon L.
  • Wilson, Bart J.

We design a laboratory experiment to explore whether and how property endogenously arises in a specialization and exchange environment where "theft" is costless. Additional treatments make available optional private protection mechanisms. We find that although an absence of exogenous enforcement does not hamper property's emergence in all cases, the private options tend to worsen outcomes on average. Property emerges when subjects self-organize groups, understand potential gains from trade, convince group members that all benefit by avoiding theft, and display credible commitment to cooperation in their actions. In other words, as Hume argued in 1740, property is a convention.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 74 (2010)
Issue (Month): 3 (June)
Pages: 206-229

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Handle: RePEc:eee:jeborg:v:74:y:2010:i:3:p:206-229
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  2. Umbeck, John, 1977. "The California gold rush: A study of emerging property rights," Explorations in Economic History, Elsevier, vol. 14(3), pages 197-226, July.
  3. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 803-832, December.
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  5. Sean Crockett & Vernon Smith & Bart Wilson, 2006. "Exchange and Specialization as a Discovery Process," Working Papers 1002, George Mason University, Interdisciplinary Center for Economic Science, revised May 2006.
  6. Smith, Adam, 1759. "The Theory of Moral Sentiments," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1759.
  7. Erik O. Kimbrough & Vernon L. Smith & Bart J. Wilson, 2008. "Historical Property Rights, Sociality, and the Emergence of Impersonal Exchange in Long-Distance Trade," American Economic Review, American Economic Association, vol. 98(3), pages 1009-39, June.
  8. Powell, Benjamin & Wilson, Bart J., 2008. "An experimental investigation of Hobbesian jungles," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 669-686, June.
  9. Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November.
  10. Alchian, Armen A. & Demsetz, Harold, 1973. "The Property Right Paradigm," The Journal of Economic History, Cambridge University Press, vol. 33(01), pages 16-27, March.
  11. Hayek, F. A., 1978. "Law, Legislation and Liberty, Volume 1," University of Chicago Press Economics Books, University of Chicago Press, number 9780226320861.
  12. Hume, David, 1739. "A Treatise of Human Nature (II) Of the Passions," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 2, number hume1739a.
  13. Kimbrough, Erik O., 2011. "Heuristic learning and the discovery of specialization and exchange," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 491-511, April.
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