An Experiment on Property Rights and In-group vs. Out-group Taking Aversion

A well functioning system of property rights is a key component of the rule of law and ultimately of development. An important trend in development policies has emphasized the need to establish formalized property rights of land (De Soto, 2000, Sjaastad and Cousins, 2009). However, a well-functioning property rights' system is built both on formal and efficient public institutions that guarantee top-down public enforcement as well as on the bottom-up emergence of coordination on the Hume's property convention where people find it privately convenient to respect each others entitlements (Sugden, 1989, Fabbri et al., 2019). An effective property system thus blends third-party enforcement of formal titles with second-party enforcement, (social norms whereby owners are willing to fight to defend and enforce their entitlements) and first-party enforcement (social norms suggesting non-owners to resist taking). The interplay between the formalization of of property rights and the development of social norms that favour the respect of others' entitlements is the subject of the present research project. Indeed there is a growing experimental literature showing how the respect for others' entitlements emerges in the lab where no second or third party enforcement is possible and this preference/norm has been labelled ``taking aversion" (Korenok et al., 2018, Faillo et al., 2019). In this project, we study whether an institutional reform formalizing land's rights carried out ten years before influenced individuals' willingness to respect others' property. A previous study by Fabbri and Dari-Mattiacci (2019) indeed shows that formalizing property rights does increase the propensity to respect each others' property however it is not clear whether this behavior spans beyond the boundaries of the small community. This is why the main experimental manipulation in our follow-up experiment concerns whether the property rights to be taken belong to either i) members of the same close-knit community or ii) individuals from a different unknown village.