PROPERTY, LAW, INFORMAL INSTITUTIONS

This thesis investigates the role of property rights institutions through the combined lenses of Law and Economics, Institutional Economics, and Behavioural Economics, with a focus on the interaction between formal legal frameworks and informal institutional environments. While the economic literature has long established that secure property rights foster investment, productivity, and economic development, this work argues that their effectiveness depends on the alignment between formal rules and underlying social norms, beliefs, and expectations. The first chapter provides a comprehensive literature review, researching the evolution of property rights from an assumption in neoclassical models to an institutional construct embedded in both legal and social orders. It investigates approaches to property as a concept in economics through the ways in which its’ determinants and effects are studied in contemporary empirical economic studies. It highlights the ongoing theoretical debate between economic and legal conceptions of property and emphasizes the need for an integrated perspective that accounts for both formal enforcement mechanisms and informal legitimacy. The second chapter empirically examines how informal institutional factors, captured through individual preferences, shape the functioning of formal property rights systems. Using cross-country data from the, the analysis demonstrates that cultural traits significantly influence the effectiveness of legal institutions, helping to explain why similar formal frameworks yield divergent outcomes across countries. The third chapter analyses how formal and informal institutional safeguards affect individuals’ perceptions of tenure security. Applying generalized ordered probit models to micro-level data, the findings show that both dimensions play a crucial role in shaping perceived security, especially for renters. The results further suggest that institutions operate partly by reducing uncertainty and anticipatory anxiety, integrating behavioural insights into institutional analysis. Overall, the thesis aims to advance a co-evolutionary framework in which property rights institutions are understood as the product of dynamic interactions between legal structures and cultural environments. It concludes that effective property systems emerge not solely from formal design but from the complementarity between enforceable law and socially embedded norms, with implications for institutional reform and economic development policy.