Mine! (How the Hidden Rules of Ownership Control Our Lives) 2/7

Michael Heller, James Salzman

Part 1.

2/ Possession Is One-Tenth of the Law

• The parking chair game – the person who cleans up their spot from snow can use this spot for the entire time until council workers clean up the area or the snow melts. Various objects are used to indicate that the parking spot is taken – chairs, cones, boxes, etc. Those ignoring this rule face vandalism or assault. This works in critical circumstances (i.e., snowfall) but won’t work in normal weather conditions (summer) when it’s “first come – first served” again.

• This unwritten rule is needed mostly when there’s scarcity of parking spots (if everyone has a spot, parking wars become unnecessary). It’s not without bad consequences, too: unused (and unmarked) resident parking can be used throughout the day for guest and delivery and trade vans parking, which now have troubles finding a suitable spot.

• An alternative logic is that if this “space saving” takes place on a public road (i.e., funded by the government), no one should be able to stake a claim – the value is in the right to park on the street, and the fact that one had to shovel the spot to get in or out is just the cost of being able to use this right.

• A deep dive into this conflict reveals something unexpected, namely – the protest of the community against newcomers and an attempt to hold on to the “neighbourhood feel” for as long as possible. But still – is it “first come – first served” or “possession”?

• Possession forms an emerging secret language, which is culture- and territory-specific. Custom, deference or silent signals drive our understanding. MK: good luck teaching AI such unwritten rules.

• The rules of possession are strong enough to shape reality and start wars; they are more compelling than law.

Value of Something to Me

• People are habitual creatures and tend to stick to the same standing / sitting / exercising spots in trains, churches, and gyms. The irritating feeling of seeing someone take “your” spot is natural because it activates the most primitive (i.e., we inherited it from animals) understanding of ownership: I am holding on to it, hence it’s mine.

• Children experience possessions at the end of their first year when they “possess” objects like blankets that they consider extensions of themselves and use for safety. Later children learn about asserting their rights to their things.

Physical Possession

• (Kahneman, Thaler) If I hold on to something, I already consider it mine, so I am either more likely to buy it, or I assign this item higher value had I not held on to it. It’s an “endowment effect”.

• Psychology of possession is everywhere: trying on new clothes, test-driving cars, playing with new iPads in Apple Stores. The trick is getting a customer physically attached to an item.

• Prior physical possession is often proof that something’s mine: handing car keys to a parking valet doesn’t make them an owner of the car. Whatever is in my pocket is mine, so if you take it – it’s theft. The rule is not “finders keepers”, but rather “finders returners”. Life won’t be fun without exceptions, though.

• Adverse possession is an exception to the rule. If one allows a trespasser to enter the land or premises and doesn’t ask/force them out for a long enough time (10-20 years, for instance), the trespasser may get the right of ownership of the land or premises. Legal ownership may be switched to the party continuously using the land if the owner doesn’t assert the ownership rights.

• Adverse possessors use the “appropriated” assets much better than absentee owners. In the US actual physical possession (say, cultivating an appropriated land for many years) may win over paper deeds, court records, etc.

• It’s not very common in practice due to the huge reputational damage that comes with the winning of a court case.

History

• Every parcel of land has its title history: owner Z bought the land from owner Y who bought it from X, dating all the way to the original land grant by the government or the King/Tzar. How did the government get hold of the land? Usually by displacing the original residents and having a long time pass, tens and often – hundreds - of years.

• In post-socialist societies there was a huge dilemma: many people (who obtained their tenancy via honest means, usually being given the place to live by the government) lived in old (in case of Russia – pre-Revolutionary) buildings that had been expropriated from the original owners. Do the heirs of the original owners have a right to be given their houses and flats back?

• In the vast majority of cases the answer was “no”: too much time has passed and establishing “fairness” would mean irreparable harm to a few generations of bona fide tenants. The heirs of the original owners may have got compensated in other ways, and not to the full extent.

• The same question is applicable to the multitude of historical objects (mummies, sculptures, utensils, etc.) currently on display in museums and in private collections. Should they be returned to the country they had been expropriated from, even though there are no identifiable owners?

• International law explicitly prohibits expropriation and conquest (not that it’s not broken from time to time). But for the acts that had taken place before the law came into effect there’s only one applicable rule so far: Possession + Time = Ownership.

The Language of Possession

• Understanding possession consists of three steps: 1 - Identification – what will send a message; 2 – Evaluation – how far does the message go; 3 – Action – acting on the meaning of the message.

• This language has context based on the scarcity of the resource. The most common encounter for scarcity is saving seats – be it a sports game, a plane (where open boarding is allowed) or a viewing point for New Year fireworks [MK: true story, in Sydney it’s a national sport].

• “Saving” a seat on a plane (during open boarding) can also be used for the tricky passenger to choose who they want to sit with; polite non-assertive (or non-good looking) people have to take the less desirable seats as a result. This can be resolved at the airline’s cost or if a regulator intervenes, but most of the time the system operates in an equilibrium of efficiency and lost revenue.

Revenue Opportunities

• MK: another famous example is the behaviour of European tourists at beach resorts where they drop their towels on beach sun-loungers early in the morning to indicate their symbolic possession of the item and go out minding their business occasionally dropping off to work on their tans. To many, including me, this is ugly behaviour.

• But it makes perfect sense to the beach / pool attendants who would occupy a couple of sun-loungers for you for just $20 early in the morning. They’re self-appointed “intermediary owners” who run this small side business by selling access.

• There have been process improvements in this respect (at the cost of the lost revenue opportunity for attendants) when saved seats are timed, and after 30-45 minutes they’re vacated and given to the next person in line.

• The benefit to the guests is that they don’t need to resolve the possession conflicts themselves and can focus on enjoying their holiday. Real owners can control access for the guests and extra revenue opportunities for the staff.

Asserting Ownership and Possession Rules

• Beaches are a similar example of scarce area that tends to get overpopulated by guests who install large tents and spread their stuff around to occupy as big of an area as they can. The conflict has to be resolved by local councils by banning tents, grills, any cooking devices on the beach.

• Prime surfing spots are occupied by groups of surfers who don’t want newcomers and would assault anyone who tries to have fun in “their” waves. This can be resolved via government intervention (meaning time, resources and taxpayer money), but artificially limiting access to only experienced surfers can have a positive side effect: less injuries from inexperience.

• “Lobster gangs” of Maine control everything from the start of fishing season to controlling the catch volumes. They fight very aggressively against newcomers, but this has a positive side effect, too: no overfishing. One of the negative side effects is creating a lobster-focused fragile aquatic monoculture.

• On a scale of outcomes, resolving inefficiencies via force or policies may not be more beneficial than leaving things the way they are. Policing and monitoring have costs, which more often than not are not worth having.

Fighting Violence with Cash

• Signals of possession can be indirect, and finely tailored cues help people keep the status quo when dealing with others’ possessions; discipline is served via social shaming. As the audience becomes larger and more diverse, unspoken cues no longer work and either rules have to be formalised, or violence becomes an option.

• Economic growth is another factor why fighting possession makes more sense: limiting access to scarce resource stifles effective economic use of an asset.

• Auctioning access to public resources may be an option, but it’s important that intermediaries (if any) don’t grab the largest piece of the pie.

• Greenwashing fans will love the fact that less circling around streets in search of parking create less emissions and noise.

• Underutilised resources (e.g., cinemas) introduce low-cost innovations to reduce friction (seat selection on a first come-first served basis) and uncertainty in order to improve customer experience. (Although it looks like a no-brainer.)

• However, ownership disputes are rarely worth litigating unless there’s firm proof that the injured party was in fact in full legal possession of the asset in question. Otherwise, possession is a choice of competing ownership stories.

Part 3.