Property Rights and Contract Form in Medieval Europe

Abstract

Throughout western Europe, beginning about 1200, leasing of 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 contract choice as a trade-off between incentives and insurance. Leasing increases as living standards improve. In England, the increase in direct management can be explained by improved security of freehold tenure, and the increase in leasing can be explained not only by improving living standards but also by improved security of leasehold tenure.

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