Go West Young Man: Self‐Selection and Endogenous Property Rights

Abstract

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 article 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. To test a hypothesis of Demsetz's, we vary across two treatments the external benefits of migrating. We find that self‐selection has a powerful effect on establishing conventions of property and begetting increases in wealth through exchange and specialization. We also find support for the Demsetz hypothesis.