Emergence and Evolution of Property Rights: an Agent Based Perspective

Abstract: We provide a critical assessment on how agent based models (ABMs) may improve and extend the traditional theoretical approaches on the origin and evolution of property rights, namely the economics of property rights and the evolutionary game models on contest behavior. The former applies a cost-benefit framework to investigate how changes in relative resource values and transaction costs affect the optimality of property regimes, but it offers only a rather comparative static analysis of the evolutionary process. The latter address the dynamics of rights evolution emerging from the repeated interactions by agents, but they are still grounded on rational choice theory assumptions and often neglect the complexity of social systems. With this perspective, we contend that ABMs, through their focus on adaptive complex systems, may integrate and foster the analytical capacity of traditional approaches in several directions. First, ABMs may test the application of behavioral rules, such as those deriving from cultural traits, which go beyond rational choice theory. Second, agent based simulations not only allow identifying stationary outcomes such as in evolutionary game models, but also enable a better understanding of the timing of evolutionary patterns. Third, unlike traditional approaches ABMs are better suited to highlight how the structure of interactions among agents influence the emergence and evolution of property rights.