Horizontal Product Differentiation in Auctions and Multilateral Negotiations

We experimentally compare first-price auctions and multilateral negotiations after introducing horizontal product differentiation into a standard procurement setting. The two institutions yield the buyer the same surplus, a difference from prior findings with homogeneous products that results from differentiation’s influence on the sellers’ pricing behavior. In particular, we find that introducing product differentiation intensifies price competition among the sellers in some treatments, and has no effect in others, which contrasts with the conventional wisdom that product differentiation softens competition.

Go West Young Man: Self-selection and Endogenous Property Rights

If, as Hume argues, property is a self-referring custom of a group of people, then property rights depend on how that group forms and orders itself. In this paper we investigate how people construct a convention for property in an experiment in which groups of self-selected individuals can migrate between three geographically separate regions. We find that the absence of property rights clearly decreases wealth in our environment and that interest in establishing property rights is a key determinant of the decision to migrate to a new region. Theft is nearly eliminated among migrants, resulting in strong growth, and non-migrants remain in poverty. Thus, self-selection, through the decision to migrate, to form more cooperative groups is essential for establishing property rights.experimental economics, property rights, migration and exit

Mine and Thine: The Territorial Foundations of Human Property

Research shows that many animal species have morphological and cognitive adaptations for fighting with others to gain resources, but it remains unclear how humans make fighting decisions. Non-human animals often adaptively calibrate fighting behavior to ecological variables such as resource quantity and whether the resource is distributed uniformly or clustered in patches. Also, many species use strategies to reduce fighting costs such as resolving disputes based on power asymmetries or conventions. Here we show that humans apply an ownership convention in response to the problem of severe fighting. We designed a virtual environment where ten participants, acting as avatars, could forage and fight for electronic food items (convertible to cash). In the patchy condition, we observed an ownership convention—the avatar who arrives first is more likely to win—but in the uniform condition, where severe fighting is rare, the ownership convention is absent.

Strategic Buyers, Horizontal Mergers and Synergies: An Experimental Investigation*

This paper reports an experiment designed to evaluate interrelationships between strategic buyers, market power and merger-induced synergies. The experiment consists of 40 posted-offer quadropolies. Treatments include the use of simulated or human buyers, seller consolidations and merger-induced fixed cost and unit cost synergies. In the simulated-buyer markets we observe behavior generally consistent with comparative static predictions: prices rise post-merger, and unit (but not fixed) cost synergies may exert some price-moderating effect. The addition of powerful buyers changes results markedly. Although prices are lower in the human buyer markets, outcomes are more variable and predicted comparative static effects are no longer observed.

Further Towards a Theory of the Emergence of Property

This article explores the emergence of property as a moral convention. To understand this process I make use of several laboratory experiments on property in its nascence. These experiments illustrate how a rule of property arises from our knowledge of what is morally right, and not vice versa. I also argue that while the ultimate end of property is our interest in using things, the proximate end of property is not losing them, i.e., the end of a rule of property is to secure from morally unfounded harm

War of Attrition: Evidence from a Laboratory Experiment on Market Exit

We report an experiment designed to study whether inecient rms are systematically driven from overcrowded markets. We implement a series of 3800 wars of attrition of a type modeled in Fudenberg and Tirole (1986). Exit tends to be ecient and exit times conform reasonably well to point predictions of the model. Moreover, we nd that subjects respond similarly to implementations framed in terms of losses as they do to those framed in terms of gains.Market exit, war of attrition, experimental economics

Humankind in Civilization’s Extended Order: A Tragedy, The First Part

This article is a short, scientific story of the labyrinthian human career, of humankind’s place in the natural order of the world, and of the evolution of moral rules and rule following that make the extended order of civilization possible. Drawing upon work in anthropology, biology, and linguistics, I weave a science-based narrative of how Homo sapiens came to be the only primate to convert enemy aliens into trading friends. It is a Goethean story of the human condition that postulates the common origins of and modern tension between Pleistocene and Anthropocene morality. It is also a Hayekian story of human universals and the uniqueness of our species that explicates some necessary but not sufficient conditions for our prosperity

On \u3cem\u3ePrivate Governance\u3c/em\u3e

Edward Peter Stringham’s book Private Governance: Creating Order in Economic and Social Life (2015) is a compelling defense of the proposition that private governance is more widely used and more effective than most people think. Stringham looks to history to see how people solved problems of fraud and cheating without government intervention and provides example after compelling example to contradict the strong claim that a government or any third-party enforcer is necessary for voluntary exchange. While Stringham doesn’t take on the tough problem that private governance is not sufficient for its task, his book is intended to be the beginning, not the end, of thinking about private governance

The Primacy of Property; or, the Subordination of Property Rights

A property right, the standard view maintains, is a proper subset of the most complete and comprehensive set of incidents for full ownership of a thing. The subsidiary assumption is that the pieces that are property rights compose the whole that is ownership or property, i.e., that property rights explain property. In reversing the standard view I argue that (1) a custom of intelligent and meaningful human action explains property and that (2) as a custom, property is a historical process of selecting actions conditional on the context. My task is to explain how a physical world of human bodies with minds that feel, think, know, and want gives rise to a custom of property with meaning and purpose. Property is primary because ideas are primary

Anarchy, Groups, and Conflict: An Experiment on the Emergence of Protective Associations

In this paper, we investigate the implications of the philosophical considerations presented in Nozick’s Anarchy, State, and Utopia, by examining group formation in a laboratory setting where subjects engage in both cooperative and conflictual interactions. We endow participants with a commodity used to generate earnings, plunder others, or protect against plunder. In our primary treatment, we allow participants to form groups to pool their resources. We conduct a baseline comparison treatment that does not allow group formation. We find that allowing subjects to organize themselves into groups does not lead to more cooperation and may in fact exacerbate tendencies for conflict.Nozickian protective associations, Conflict, Anarchy, Experimental economics