June, 2013

Insiders, Outsiders, and the Adaptability of Informal Rules to Ecological Shocks

  • Erik Kimbrough

    Associate Professor of Economics, Chapman University
  • Bart Wilson

    Mercatus Center Affiliated Scholar
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The history of the world is strewn with the remains of societies whose institutions failed to adapt to ecological change, but the determinants of institutional fragility are difficult to identify in the historical record. We report a laboratory experiment exploring the impact of an exogenous ecological shock on the informal rules of property and exchange. We find that geographically-induced tribal sentiments, which are unobservable in the historical record, impede adaptation post shock and that inequality declines as wealth and sociableness increase. Quantitative measures of individual and group sociality account for some of the differences in successful or failed adaptation.

Find article at Science Direct