Property Rights and Contract Form in Medieval Europe

Abstract:     
Throughout western Europe, beginning about 1200, leasing of feudal lords' estates became more common relative to direct management. In England, however, direct management increased beginning around the same time and until the fourteenth century, and leasing increased thereafter.

This article models the lord-peasant relationship as a game where contract form is chosen as the result of a tradeoff between incentives for high effort and excessive risk-bearing. Leasing increases as peasants' living standards improve. As for England, the increase in direct management can be explained by property law innovations that increased the security of freehold tenure, and the increase in leasing can be explained not only by improving living standards but also by increasing security of leasehold tenure. This model also explains why small landowners are more likely to manage their land directly, and why large landowners are more likely to lease their small estates than their large ones.

Number of Pages in PDF File: 55

Keywords: medieval, common law, property, contract theory, moral hazard, principal-agent, contract choice, freehold, leasehold

JEL Classification: D23,J43,K11,K12,N33,N40,N43,N50,N53,O13,Q12,Q15

working papers series