“Experimental Studies on the Psychology of Property Rights”, Anouar El Haji2017-02-03 (copyright, auctions, ethics)⁠:

Property rights determine who owns what. Trade is very difficult if it is unclear who owns what or if property rights are not enforced. For this reason, many scholars argue that property rights and their enforcement are essential to economic prosperity.

A distinction can be made between a legal and psychological approach to property rights. A legal approach to property rights considers how the rules of property rights are codified in law while a psychological approach focuses on how humans tend to think about property rights intuitively.

The two approaches seem to diverge if more unconventional goods are considered. This thesis consists of 4 studies that investigate how consumers perceive unconventional goods in different contexts.

The aim of these 4 studies combined is to gain a better understanding of consumers’ perception of property rights, which not only furthers relevant theories but also provides practical recommendations to policy-makers and managers.

1. Introduction

2. The moral distinction between theft and piracy

3. Theft and piracy: Incentivized experiments

4. Dilution illusion

5. Trading places

6. Discussion and implications

…Ch2 consists of 4 vignette experiments. The goal of the first experiment is to establish to what extent a moral distinction between theft and piracy exists. The second experiment aims to establish whether consumers are more likely to pirate than to steal. The 3^rd and 4^th experiment aim to disentangle to what extent rivalry and tangibility can explain the moral distinction between theft and piracy.

…the studies in Ch2 consist of presenting hypothetical scenarios to the participant as an objective observer. Ch3 presents two economic experiments in which participants were provided the opportunity to steal or pirate. Thus, participants could actually monetarily gain from stealing or pirating and in those cases victims were actually monetarily disadvantaged. In the first experiment participants were only able to steal or pirate a single good. The second experiment extends to number of goods that can be stolen or pirated to 10 and we manipulate the prices to vary the monetary incentive to steal or pirate. The experiments reported in Ch3 also introduce a novel method to compare theft and piracy without changing the payoff structure. As a result, the difference between theft and piracy is a matter of changing frames, which allows drawing conclusions about why consumers are more averse to theft than to piracy.

…Ch5 studies how the introduction of property rights in a queue can affect trading behavior and fairness perceptions. Queues arise if consumers are required to wait before being served and tend to become longer as demand exceeds supply even more (Kumar, Kalwani & Dada1997). Queues can be prevented if the monetary price for the service is sufficiently high. However, in many cases prices cannot be changed or even introduced due to practical or ethical reasons. Consumers waiting in line are in essence paying with their time on top of the monetary price for the service (Kleinrock1967). This leads to an inefficient allocation of services because the value of time is not the same for everyone.

theoretically, this inefficiency can be reduced if property rights are applied to the positions in queue (Gershkov & Schweinzer2010). This would allow the queued consumers to trade positions, which would allow consumers with a high time value to pay for moving forward in the queue and consumers with a low time value receive money to move back in the queue. A position in the queue is an example of a rivalrous but intangible good. The study in Ch5 investigates empirically how consumers respond to the ability to trade places in a queue. Specifically, two auction mechanisms are compared: (1) a server-initiated auction (SIA) and (2) a customer-initiated auction (CIA). The SIA mechanism requires every consumer to place a bid on a position, including the incumbent consumer, and the proceeds are distributed equally among the bidders. Thus, under the SIA mechanism, incumbents are not entitled to ‘their’ position in the queue and do not receive the full amount for selling their position. However, under the CIA mechanism property rights are exogenously enforced. Consumers can trade positions with the person in front of them. However, the person in front is not forced to sell and receives the full amount if sold. This experimental design makes it possible to study whether biases related to property ownership, such as the endowment effect (Kahneman et al 1990_34ya) and the sunk cost effect (Arkes & Blumer1985), are present and whether the exogenous enforcement of property rights affects bidding behavior.

Ch5 is based on the paper titled “Trading Places: An Experimental Comparison of Reallocation Mechanisms for Priority Queuing” and the co-author is Dr. Sander Onderstal.⁴ Sander Onderstal and I designed the experiment. I conducted the experiment and analyzed the data. Sander Onderstal and I wrote the paper. Sander Onderstal provided supervision. Financial support from the University of Amsterdam Research Priority Area in Behavioral Economics is gratefully acknowledged.