Property rights and investments: An evolutionary approach

Luciano Andreozzi

Games and Economic Behavior, 2012, vol. 74, issue 1, 1-11

Abstract: When contracts are not enforceable, or property rights are not clearly defined, individuals may lack an incentive to carry out costly investments even when they are socially efficient. Some recent contributions such as Ellingsen and Robles (2002) prove that this problem may be less dramatic than standard economic models would suggest. They propose evolutionary models in which only efficient equilibria can be (stochastically) stable. In this paper we show that these results are not robust with respect to the introduction of individual heterogeneity. When individuals have different cost functions, stochastically stable states may be inefficient, even when they induce a positive (suboptimal) level of investment.

Keywords: Specific investment; Evolution; Fairness; Heterogeneous agents (search for similar items in EconPapers)
JEL-codes: C78 L14 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:74:y:2012:i:1:p:1-11

DOI: 10.1016/j.geb.2011.07.001

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