This award is funded under the American Recovery and Reinvestment Act of 2009 (Public Law 111-5).
The premise of this research is that a society's prosperity hinges in part on property being sufficiently secure from theft so that investing in production, rather than investing in protecting one's property from theft or engaging in theft, is an attractive alternative. The research employs the method of laboratory decision-making experiments in which subjects make repeated sets of decisions between allocating tokens among four activities: production, theft, private property protection, and collective property protection. In some versions of the experiment, subjects are asked to vote on whether the amount allocated to collective property protection should be determined in a mandatory way by majority vote. Subjects are motivated by the prospect of converting their tokens to real money at the end of the experiments. Mandatory collective protection mirrors public policing and court systems and is more efficient than strictly private protection. When protection of property depends on voluntary efforts, most individuals are expected to skimp on these efforts, trying to free ride on the efforts of others. This problem of free riding can be resolved by making allocations mandatory, and there is no incentive to understate the desired level of protection when making proposals under such a system. Experiments are conducted with subjects in four different countries (U.S., Germany, Mexico, Mongolia) to test whether choices, including those with regard to using the mandatory system and the level of collective protection, vary systematically from one population to another, possibly helping to explain lower security of property in less developed countries.
The experimental method has increased in popularity in recent decades but its application to the question of property rights has thus far been minimal, with almost no study of emergence of property rights institutions and no cross-national study. The project will contribute to the training of doctoral candidates from Mexico and Mongolia. It will advance the development of experimental social science at Brown University and at the other sites. The results will be written up in scientific research papers and described for general and policy-maker audiences. The project should help to put the understanding of property rights and their variability across societies on a sounder footing, with particular value to social scientists and policy-makers attempting to fashion better policies to foster the economic development of poor countries.
