Economist Writing Every Day

I’m reading The Property Species by Bart Wilson. I like chapter 4 “What is Right is Not Taken Out of the Rule, but Let the Rule Arise Out of What Is Right,” partly because I got to play a small part in this line of research.

Along with several coauthors, Bart Wilson has run experiments in which players have the ability to make and consume goods. According to the instructions that all players read at the beginning of the experiment, “when the clock expires… you earn cash based upon the number of red and blue items that have been moved to your house.”

Property norms can emerge in these environments, and sometimes subjects take goods from each other in an action that could be called “stealing.” The experimental instructions do not contain any morally loaded words like “stealing,” but subjects use that word to describe the activities of their counterparts.

Here is a conversation from the transcript of the chat room players can use to communicate while they produce and trade digital goods:

E: do you want to do this right way?

F: wht is the right way

E: the right way is I produce red you make blue then we split it nobody gets 100 percent profit but we both win

F: tht wht I been doing then u started stealing

Player F might apply the term “mine” to a good in her house on the computer screen. Player F perceives that she is being injured if Player E takes away a good from which Player F had expected to earn money.

Why is it important to analyze the development of property norms in a novel environment? In the markets that economists model, it is assumed that property exist. Wilson challenges readers to not take property for granted.

Although animals might appear to defend their perches or nuts, Wilson argues that the human idea of property is, “extraordinary and uncommon in the animal kingdom.” Property comes from human customs and is possible because of the human capacity for symbolic thought and language. Different environments and communities will come up with different standards of behavior. The notions of property that we share in rich countries today have not always existed. Understanding how they emerge and change over time is one of the keys to the puzzle of wealth and poverty.

One of the papers about the emergence of property norms around rivalrous goods is:

Kimbrough, Erik O., Vernon L. Smith, and Bart J. Wilson. 2008. “Historical Property Rights, Sociality, and the Emergence of Impersonal Exchange in Long-Distance Trade.” American Economic Review, 98 (3): 1009-39.

Our paper about the emergence of property norms around non-rivalrous goods is:

Buchanan, Joy A., Wilson, Bart J. 2014. “An experiment on protecting intellectual property.” Experimental Economics, 17, 691–716.

We found that when we provided intellectual property (IP) protection, entrepreneurs emerged who were able to create value for others (and capture money for themselves) by specializing in the creation of non-rivalrous knowledge goods. Experimental subjects who had never experienced IP protection in our environment did not call it theft when their creations got copied. However, if we provided IP protection and then took it away, then we got the following objection from one entrepreneur in the chatroom: “why do you sell my colors? stop re-selling my colors or ill stop making and no1 will have”.

This is the only explicit objection to piracy in our experiments. Experiencing protection in the IP treatment led him to demand that his intellectual property be respected in the No IP treatment. However, unlike the earlier experiments with rivalrous goods, there was no explicit references to “stealing” in the intellectual property experiments that we ran.