IDEAS home Printed from https://ideas.repec.org/a/ucp/jlawec/doi10.1086-687411.html
   My bibliography  Save this article

Bargaining in the Absence of Property Rights: An Experiment

Author

Listed:
  • Oren Bar-Gill
  • Christoph Engel

Abstract

The Coase theorem posits that if (1) property rights are perfect, (2) contracts are perfectly enforceable, (3) transaction costs are zero, (4) preferences are common knowledge, and (5) parties are rational, then the initial allocation of entitlements matters only for distribution, not for efficiency. We study, in an experimental setting, whether condition 1 is necessary. Our results suggest that property rights have a limited effect on efficiency.

Suggested Citation

  • Oren Bar-Gill & Christoph Engel, 2016. "Bargaining in the Absence of Property Rights: An Experiment," Journal of Law and Economics, University of Chicago Press, vol. 59(2), pages 477-495.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/687411
    DOI: 10.1086/687411
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/687411
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: http://dx.doi.org/10.1086/687411
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/687411?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Engel, Christoph & Nagin, Daniel, 2015. "Who is Afraid of the Stick? Experimentally Testing the Deterrent Effect of Sanction Certainty," Review of Behavioral Economics, now publishers, vol. 2(4), pages 405-434, December.
    2. Haisley, Emily C. & Weber, Roberto A., 2010. "Self-serving interpretations of ambiguity in other-regarding behavior," Games and Economic Behavior, Elsevier, vol. 68(2), pages 614-625, March.
    3. Linda Babcock & George Loewenstein, 1997. "Explaining Bargaining Impasse: The Role of Self-Serving Biases," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 109-126, Winter.
    4. Varouj A. Aivazian & Jeffrey L. Callen & Susan McCracken, 2009. "Experimental Tests of Core Theory and the Coase Theorem: Inefficiency and Cycling," Journal of Law and Economics, University of Chicago Press, vol. 52(4), pages 745-759, November.
    5. Charness, Gary, 2000. "Self-Serving Cheap Talk: A Test Of Aumann's Conjecture," Games and Economic Behavior, Elsevier, vol. 33(2), pages 177-194, November.
    6. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    7. David Cooper & E. Dutcher, 2011. "The dynamics of responder behavior in ultimatum games: a meta-study," Experimental Economics, Springer;Economic Science Association, vol. 14(4), pages 519-546, November.
    8. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    9. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 7, March.
    10. Daphna Lewinsohn-Zamir, 2012. "The Questionable Efficiency of the Efficient-Breach Doctrine," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(1), pages 5-26, March.
    11. Armin Falk & David Huffman, 2007. "Studying Labor Market Institutions in the Lab: Minimum Wages, Employment Protection, and Workfare," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(1), pages 30-45, March.
    12. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon, 2008. "Reciprocity in Ultimatum and Dictator Games: An Introduction," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 46, pages 411-416, Elsevier.
    13. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 4, March.
    14. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 2, March.
    15. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 1, March.
    16. Loewenstein, George & Issacharoff, Samuel & Camerer, Colin & Babcock, Linda, 1993. "Self-Serving Assessments of Fairness and Pretrial Bargaining," The Journal of Legal Studies, University of Chicago Press, vol. 22(1), pages 135-159, January.
    17. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    18. Lucian Arye Bebchuk, 1984. "Litigation and Settlement under Imperfect Information," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 404-415, Autumn.
    19. Todd Cherry & Jason Shogren, 2005. "Costly Coasean Bargaining and Property Right Security," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(3), pages 349-367, July.
    20. Prudencio, Yves Coffi, 1982. "The voluntary approach to externality problems: An experimental test," Journal of Environmental Economics and Management, Elsevier, vol. 9(3), pages 213-228, September.
    21. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    22. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 3, March.
    23. Bock, Olaf & Baetge, Ingmar & Nicklisch, Andreas, 2014. "hroot: Hamburg Registration and Organization Online Tool," European Economic Review, Elsevier, vol. 71(C), pages 117-120.
    24. Hessel Oosterbeek & Randolph Sloof & Gijs van de Kuilen, 2004. "Cultural Differences in Ultimatum Game Experiments: Evidence from a Meta-Analysis," Experimental Economics, Springer;Economic Science Association, vol. 7(2), pages 171-188, June.
    25. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 8, March.
    26. Croson, Rachel & Johnston, Jason Scott, 2000. "Experimental Results on Bargaining Under Alternative Property Rights Regimes," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(1), pages 50-73, April.
    27. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 5, March.
    28. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
    29. Charles R. Plott & Vernon L. Smith (ed.), 2008. "Handbook of Experimental Economics Results," Handbook of Experimental Economics Results, Elsevier, edition 1, volume 1, number 6, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tatyana Deryugina & Frances C. Moore & Richard S.J. Tol, 2020. "Applications of the Coase Theorem," Working Paper Series 0820, Department of Economics, University of Sussex Business School.
    2. Oren Bar-Gill & Christoph Engel, 2018. "How to Protect Entitlements: An Experiment," Journal of Law and Economics, University of Chicago Press, vol. 61(3), pages 525-553.
    3. Aivazian, Varouj A. & Callen, Jeffrey L., 2023. "The Coase Theorem and the empty core: Inspecting the entrails after four decades," International Review of Law and Economics, Elsevier, vol. 73(C).
    4. Friesen, Lana & MacKenzie, Ian A. & Nguyen, Mai Phuong, 2023. "Initially contestable property rights and Coase: Evidence from the lab," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    5. Oren Bar-Gill & Christoph Engel, 2020. "Property is Dummy Proof: An Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2020_02, Max Planck Institute for Research on Collective Goods.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oren Bar-Gill & Christoph Engel, 2016. "Bargaining in the Absence of Property Rights: An Experiment," Journal of Law and Economics, University of Chicago Press, vol. 59(2), pages 477-495.
    2. Oren Bar-Gill & Christoph Engel, 2018. "How to Protect Entitlements: An Experiment," Journal of Law and Economics, University of Chicago Press, vol. 61(3), pages 525-553.
    3. James C. Cox & Vjollca Sadiraj, 2018. "Incentives," Experimental Economics Center Working Paper Series 2018-01, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
    4. Güth, Werner & Kocher, Martin G., 2014. "More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 396-409.
    5. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    6. Königstein, Manfred & Villeval, Marie Claire, 2010. "Efficiency and behavioral considerations in labor negotiations," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 599-611, August.
    7. Rustichini, Aldo & Villeval, Marie Claire, 2014. "Moral hypocrisy, power and social preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 10-24.
    8. Döring Thomas, 2013. "John Maynard Keynes als Verhaltensökonom – illustriert anhand seiner Analyse des Versailler Vertrags / John Maynard Keynes as Behavioral Economist – Represented by his Analysis of the Treaty of Versai," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 64(1), pages 27-52, January.
    9. Di Guida, Sibilla & Han, The Anh & Kirchsteiger, Georg & Lenaerts, Tom & Zisis, Ioannis, 2020. "Endogenous Group Formation and its impact on Cooperation and Surplus Allocation - An Experimental Analysis," Discussion Papers on Economics 8/2020, University of Southern Denmark, Department of Economics.
    10. Elena Cettolin & Arno Riedl, 2017. "Justice Under Uncertainty," Management Science, INFORMS, vol. 63(11), pages 3739-3759, November.
    11. Friederike Mengel & Ronald Peeters, 2022. "Do markets encourage risk-seeking behaviour?," The European Journal of Finance, Taylor & Francis Journals, vol. 28(13-15), pages 1474-1480, October.
    12. Andrea Albertazzi & Friederike Mengel & Ronald Peeters, 2021. "Benchmarking information aggregation in experimental markets," Economic Inquiry, Western Economic Association International, vol. 59(4), pages 1500-1516, October.
    13. Pierre-Olivier Pineau, 2022. "Choosing to Pay More for Electricity: an experiment on the level of residential consumer cooperation," CIRANO Working Papers 2022s-18, CIRANO.
    14. Giuseppe Attanasi & Samuele Centorrino & Elena Manzoni, 2020. "Zero-Intelligence vs. Human Agents: An Experimental Analysis of the Efficiency of Double Auctions and Over-the-Counter Markets of Varying Sizes," Working Papers 05/2020, University of Verona, Department of Economics.
    15. Pfajfar, Damjan & Žakelj, Blaž, 2018. "Inflation Expectations And Monetary Policy Design: Evidence From The Laboratory," Macroeconomic Dynamics, Cambridge University Press, vol. 22(4), pages 1035-1075, June.
    16. Jiří Špalek & Zuzana Berná, 2011. "Threshold Effectiveness in Contributing to the Public Goods: Experiments Involving Czech Students," Prague Economic Papers, Prague University of Economics and Business, vol. 2011(3), pages 250-267.
    17. Pfajfar, Damjan & Žakelj, Blaž, 2014. "Experimental evidence on inflation expectation formation," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 147-168.
    18. Hennig-Schmidt, Heike & Selten, Reinhard & Wiesen, Daniel, 2011. "How payment systems affect physicians' provision behaviour--An experimental investigation," Journal of Health Economics, Elsevier, vol. 30(4), pages 637-646, July.
    19. Giovanni Di Bartolomeo & Stefano Papa, 2019. "The Effects of Physical Activity on Social Interactions: The Case of Trust and Trustworthiness," Journal of Sports Economics, , vol. 20(1), pages 50-71, January.
    20. Alice Guerra & Mogens K. Justesen, 2022. "Vote buying and redistribution," Public Choice, Springer, vol. 193(3), pages 315-344, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:doi:10.1086/687411. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.