Property Rights Out Of Anarchy? The Demsetz Hypothesis In A Game Of Conflict

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
David Bruner Ph.D., Assistant Professor (Creator)
Appalachian State University (ASU )
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Abstract: The Demsetz hypothesis states that secure claims to property arise when the value of creating those rights is sufficiently high. This paper examines the conditions under which this holds in an anarchy equilibrium in which players may allocate labor to production, to conflict, or to the public good of secure claims to property protection. In a simultaneous choice Nash equilibrium, no secure claims to property are created. However, if players play a sequential choice game in which secure claims to property protection occurs in the first stage, then the strategic benefit of reducing others’ subsequent conflict allocation causes secure claims to property to arise. Secure claims to property in a social contract are imperfect, but for sufficiently high productivity of resources, the social contract welfare dominates autocracy.

Additional Information

Boyce, J., & Bruner, D. (2012) “Property Rights Out Of Anarchy? The Demsetz Hypothesis In A Game Of Conflict”. Economics Of Governance, 13(2), 95-120. [DOI:10.1007/s10101-012-0107-9] Version Of Record Available At
Language: English
Date: 2012
Conflict games, Demsetz hypothesis, Endogenous property rights

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