A Simple, Ecologically Rational Rule for Settling Found Property Disputes

Abstract

Who has property in a found item X, which is contained in Y? The finder of X or the person who has property in Y? The common law says it depends. It depends upon whether the owner of Y knew about X, or whether X was lost or mislaid, or how small the weight of X is relative to Y (as compared to its value), or whether the finder was an employee of the owner of Y, to name just a few. Wilson (2020) hypothesizes that humans universally cognize property as being contained in a thing. A testable implication of the hypothesis reveals a simpler, clearer rule for settling found property disputes in the common law: if A has property in Y and X is in Y, then A has property in X, even if B finds X. Using a 2 x 2 design, I report the results of a three-dimensional virtual world experiment to test how incentivized panels of participants award a found item to one of two actual parties who have an all-or-nothing financial stake in the panel’s decision. The results of the experiment strongly support the hypothesis, even, unexpectedly, under counterfactual conditions.

Keywords: property, property rights, lost property, experimental economics

JEL Classification: K11, C90