Property rights and institutions in biblical society: The purchase of the Cave of the Patriarchs Jacob Rosenberg a , Avi Weiss a,b, ⁎ a Department of Economics, Bar-Ilan University, Ramat Gan 52900, Israel b IZA, Bonn, Germany article info abstract Article history: Received 23 August 2011 Received in revised form 12 January 2012 Accepted 15 January 2012 Available online 24 January 2012 A market economy and civil society require specification and certification of property rights. Where property rights are recognized, allowable transactions are also institutionally specified. In this paper we describe and analyze the earliest documented transfer of property rights to land, in Hebron in the 17th century BCE when Abraham purchased the Cave of the Patriarchs from Ephron the Hittite. We show how a property right perspective with institutional con- straint on permissible transactions resolves the puzzles that have been previously noted in the bargaining between the buyer and seller. © 2012 Elsevier B.V. All rights reserved. JEL classification: K11 D23 N15 Keywords: Property rights Cave of the Patriarchs 1. Introduction Property rights are a requisite of a market economy and indeed for a civil society. In the absence of property rights, exchange cannot take place and claims to property become a source of conflict (Skaperdas, 1992), and rights of possession are displaced by the dictates of the strong over the weak (Hillman, 2004). In the economics literature, the centrality of property rights for efficient economic incentives has been recognized at least since the pioneering work of Coase (1937). As Demsetz (1967) and Bailey (1992) have shown, in previous times primitive societies allocated and enforced property rights when warranted by economic conditions. In this paper we consider the earliest documented transfer of property rights to land. The transaction that we study is described in Chapter 23 of the book of Genesis, and took place in Hebron in the 17th century BCE when Abraham purchased the Cave of the Patriarchs from Ephron the Hittite as a burial ground for his wife Sarah (and, eventually, also for himself, his son Isaac and his wife Rebecca, and his grandson Jacob and wife Leah). The account presents details of the entire negotiation process that took place between the buyer Abraham and the seller Ephron, beginning from Abraham's initial inquiries until agreement is reached, payment is made, and the property changes own- ership. The bargaining and the reported dialogue raise questions that have suggested puzzles. The puzzles have been addressed by theologians and academicians and numerous explanations aimed at resolving the puzzles have been proposed. 1 Yet prior explanations, to the best of our understanding, do not resolve all of the puzzles. We show that a property right view explains the bargaining involved in the transaction. In investigating the sale from a property right perspective, we demonstrate the regard for the rule of law in an ancient society and the role of institutions in specifying allowable property transactions. 2 To set the stage, we present a synopsis of Abraham's travels as reflected in Genesis Chapters 12–23. European Journal of Political Economy 28 (2012) 279–285 ⁎ Corresponding author at: Department of Economics, Bar-Ilan University, Ramat Gan 52900, Israel. Tel.: + 972 52 555 3162(Voice); fax: + 972 3 738 4034. E-mail address: avi.weiss@biu.ac.il (A. Weiss). 1 See, for example, Lehmann (1953) and Westbrook (1971). 2 On the evidence regarding institutions in modern societies, see Efendic et al. (2011). 0176-2680/$ – see front matter © 2012 Elsevier B.V. All rights reserved. doi:10.1016/j.ejpoleco.2012.01.002 Contents lists available at SciVerse ScienceDirect European Journal of Political Economy journal homepage: www.elsevier.com/locate/ejpe