The evolution of private property

Experimental studies have shown that subjects exhibit a systematic endowment effect. No acceptable explanation for the existence of this behavior has been offered. This paper shows that the endowment effect can be modeled as respect for private property in the absence of legal institutions ensuring third-party contract enforcement. In this sense, “natural” private property has been observed in many species, in the form of recognition of territorial incumbency. We develop a model loosely based on the Hawk–Dove–Bourgeois game [Maynard Smith, J., Parker, G.A., 1976. The logic of asymmetric contests. Animal Behaviour 24, 159–175) and the War of Attrition [Maynard Smith, J., Price, G.R., 1973. The logic of animal conflict. Nature 246, 15–18] to explain the natural evolution of private property.