Fairness and the Optimal Allocation of Ownership Rights

Klaus Schmidt (), Ernst Fehr and Susanne Kremhelmer

No 5369, CEPR Discussion Papers from Centre for Economic Policy Research

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: Ownership rights; Double moral hazard; Fairness; Reciprocity; Incomplete contracts (search for similar items in EconPapers)
JEL-codes: C7 C9 J3 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-exp and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Fairness and the Optimal Allocation of Ownership Rights (2008)
Journal Article: Fairness and the Optimal Allocation of Ownership Rights (2008)
Working Paper: Fairness and the optimal allocation of ownership rights (2008)
Working Paper: Fairness and the Optimal Allocation of Ownership Rights (2005)
Working Paper: Fairness and the Optimal Allocation of Ownership Rights (2005)
Working Paper: Fairness and the Optimal Allocation of Ownership Rights (2004)
Working Paper: Fairness and the Optimal Allocation of Ownership Rights
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