The Evolution of Property Rights
Every Man has a property in his own Person. This no Body has any
Right to but himself. The Labour of his Body, and the Work of his
Hands, we may say, are properly his.
This chapter illustrates the synergy among the rational actor model, game theory, the socio-psychological theory of norms and gene-culture coevolution (§7.10), highlighting the gains that are possible when ossified disciplinary boundaries are shattered. The true power of game-theoretic analysis becomes manifest only when we cast our theoretical net beyond the strictures of methodological individualism (§8.8). The underlying model is taken from Gintis (2007b). A general case for the methodological approach followed in this chapter is presented in chapter 12.
Authors tracing back to the origins of political liberalism have treated property rights as a social norm the value of which lies in reducing conflict over rights of incumbency (Schlatter 1973). Our analysis of the bourgeois strategy as a social norm effecting an efficient correlated equilibrium embodies this classical notion (§7.3). However, we argued in chapter 7 that a social norm is likely to be fragile and unstable unless individuals generally have a normative predisposition to conform. We here interpret the well-known phenomena of loss-aversion and the endowment effect (§1.9) as highly rational forms of normative predisposition. In this case, the norm is shared with many species of animals as well, in the form of territoriality.
The endowment effect is the notion that people value a good that they possess more highly than they value the same good when they do not possess it (§1.9). Experimental studies (§11.2) have shown that subjects exhibit a systematic endowment effect. The endowment effect is widely considered to be an instance of human irrationality. We suggest here that the endow-