Fairness and the Optimal Allocation of Ownership Rights

Ernst Fehr (), Susanne Kremhelmer and Klaus M. Schmidt ()

No 5369, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: double moral hazard; fairness; incomplete contracts; ownership rights; reciprocity (search for similar items in EconPapers)
JEL-codes: C7 C9 J3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-soc
Date: 2005-11
View list of references View citations in EconPapers

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP5369.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Fairness and the Optimal Allocation of Ownership Rights
Working Paper: Fairness and the Optimal Allocation of Ownership Rights (2004)
Working Paper: Fairness and the Optimal Allocation of Ownership Rights (2005)
Working Paper: Fairness and the Optimal Allocation of Ownership Rights (2005)
Journal Article: Fairness and the Optimal Allocation of Ownership Rights (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:5369

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP5369.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Series data maintained by ().