Fairness and the Optimal Allocation of Ownership Rights *

We report on several experiments on the optimal allocation of ownership rights. The experiments confirm the property rights approach by showing that the ownership structure affects relationship‐specific investments and that subjects attain the most efficient ownership allocation despite starting from different initial conditions. However, in contrast to the property rights approach, the most efficient ownership structure is joint ownership. These results cannot be explained by the self‐interest model nor by models that assume that all people behave fairly but they are largely consistent with approaches that focus on the interaction between selfish and fair players.