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Exchange, theft, and the social formation of property

Author Info

Listed author(s):
  • Kimbrough, Erik O.
  • Smith, Vernon L.
  • Wilson, Bart J.

Abstract

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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File URL: http://www.sciencedirect.com/science/article/pii/S0167-2681(10)00054-5
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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

Keywords: Property rights Specialization Exchange Experimental economics;

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  1. 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.
  2. Burnham, Terence & McCabe, Kevin & Smith, Vernon L., 2000. "Friend-or-foe intentionality priming in an extensive form trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 57-73, September.
  3. Smith, Adam, 1759. "The Theory of Moral Sentiments," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1759.
  4. Sean Crockett & VernonL. Smith & BartJ. Wilson, 2009. "Exchange and Specialisation as a Discovery Process," Economic Journal, Royal Economic Society, vol. 119(539), pages 1162-1188, 07.
  5. 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.
  6. Hume, David, 1739. "A Treatise of Human Nature (I) Of the Understanding," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number hume1739.
  7. Hume, David, 1740. "A Treatise of Human Nature (III) Of Morals," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 3, number hume1740.
  8. 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 1009-1039, June.
  9. 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.
  10. Peyton Young, H., 1998. "Social norms and economic welfare1," European Economic Review, Elsevier, vol. 42(3-5), pages 821-830, May.
  11. 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.
  12. 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.
  13. 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.
  14. 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.
  15. Hayek, F. A., 1978. "Law, Legislation and Liberty, Volume 1," University of Chicago Press Economics Books, University of Chicago Press, number 9780226320861, October.
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Cited by:

  1. Erik O. Kimbrough & Roman M. Sheremeta, 2012. "Why Can’t We Be Friends? Entitlements, bargaining, and conflict," Working Papers 12-16, Chapman University, Economic Science Institute.
  2. Francisco Campos-Ortiz & Louis Putterman & T.K. Ahn & Loukas Balafoutas & Mongoljin Batsaikhan & Matthias Sutter, 2012. "Security of Property as a Public Good: Institutions, Socio-Political Environment and Experimental Behavior in Five Countries," Working Papers 2012-18, Brown University, Department of Economics.
  3. Joy Buchanan & Bart Wilson, 2014. "An experiment on protecting intellectual property," Experimental Economics, Springer;Economic Science Association, vol. 17(4), pages 691-716, December.
  4. T.K Ahn & Loukas Balafoutas & Mongoljin Batsaikhan & Francisco Campos Ortiz & Louis Putterman & Matthias Sutter, 2016. "Trust and Communication in a Property Rights Dilemma," Working Papers 2016-5, Brown University, Department of Economics.
  5. Andrew Young, 2015. "From Caesar to Tacitus: changes in early Germanic governance circa 50 BC-50 AD," Public Choice, Springer, vol. 164(3), pages 357-378, September.
  6. Meier, Stephan & Stephenson, Matthew, 2015. "Culture of Trust and Division of Labor," IZA Discussion Papers 8974, Institute for the Study of Labor (IZA).
  7. Camera, Gabriele & Gioffré, Alessandro, 2014. "Game-theoretic foundations of monetary equilibrium," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 51-63.
  8. Marco Faillo & Matteo Rizzolli & Stephan Tontrup, 2016. "Thou shalt not steal (from hard-working people)An experiment on respect for property claims," Econometica Working Papers wp58, Econometica.
  9. Bart J. Wilson & Taylor Jaworski & Karl E. Schurter & Andrew Smyth, 2012. "The Ecological and Civil Mainsprings of Property: An Experimental Economic History of Whalers' Rules of Capture," Journal of Law, Economics and Organization, Oxford University Press, vol. 28(4), pages 617-656, October.
  10. Kimbrough, Erik O. & Wilson, Bart J., 2013. "Insiders, outsiders, and the adaptability of informal rules to ecological shocks," Ecological Economics, Elsevier, vol. 90(C), pages 29-40.
  11. Bart Wilson, 2015. "Further towards a theory of the emergence of property," Public Choice, Springer, vol. 163(1), pages 201-222, April.
  12. Ahn, T.K. & Balafoutas, Loukas & Batsaikhan, Mongoljin & Campos-Ortiz, Francisco & Putterman, Louis & Sutter, Matthias, 2016. "Securing property rights: A dilemma experiment in Austria, Mexico, Mongolia, South Korea and the United States," Journal of Public Economics, Elsevier, vol. 143(C), pages 115-124.

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