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Exchange, theft, and the social formation of property

Erik Kimbrough, Vernon Smith and Bart Wilson ()

Journal of Economic Behavior & Organization, 2010, vol. 74, issue 3, 206-229

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.

Keywords: Property; rights; Specialization; Exchange; Experimental; economics (search for similar items in EconPapers)
Date: 2010
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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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Handle: RePEc:eee:jeborg:v:74:y:2010:i:3:p:206-229