Exchange, Theft and the Social Formation of Property

E.O. Kimbrough, V.L. Smith, B.J. Wilson

Research output: Contribution to journalArticleAcademicpeer-review

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.

Original languageEnglish
Pages (from-to)206-229
Number of pages24
JournalJournal of Economic Behavior & Organization
Volume74
Issue number3
DOIs
Publication statusPublished - Jun 2010

Keywords

  • Property rights
  • Specialization
  • Exchange
  • Experimental economics
  • RIGHTS

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