Thursday, May 3, 2012

Lost and Found Redux: Lost and Founder

In my last post, I referenced a classic opportunity cost exam question. The scenario stipulates that you've camped out overnight for tickets to a concert whose box office price was $300. Before you got to the window, the tickets had been sold out. Dejected, you slog back to your car, but on the way you find tickets being sold by scalpers for a fivefold markup. Unwilling to shell out $1500 for the tickets, you hop in your Volvo Taco Truck and head to the nearest Waffle House for some smothered hash browns and watery coffee.

In your booth, you find an envelope. The envelope is not sealed, so you peer inside. Lo and behold, you find tickets to the very concert you were camped out for. At this point there is some hurried lip service to discharging a moral duty to return the property to its rightful owner, then the professor gets to the real meaty question: what do you do, attend the concert or head back and sell your windfall find? The answer tells you whether or not your students picked up the idea of opportunity cost (hint: many of them haven't). That's fine, but the scenario got me to thinking.

Assuming that there is indeed a moral imperative to find the original owner, does that obligation depend on the contents of the envelope? Is there a similar moral duty to return $1500 cash as there is to return $1500 worth of concert tickets?

We all know that value is subjective, but the closest thing we have to objective value is cash (nod to Nathanael Snow for reminding me that the value of cash is more contextual than subjective), so $1500 cash is worth $1500. $1500 in tickets is subjectively worth $1500 or more to the original owner. They were somewhere up there on the upswing of the demand curve.

So given this self-evident premium, should there be more consideration given to restoring goods to the original owner than to a market-equivalent amount of cash? Is this trash-treasure relationship relevant? If the owner of a booger collection who valued his lost or stolen boogers at half a million dollars be as deserving of restoration as a half-million dollar sapphire necklace owner? What are the relevant margins? Presumed social status? Does your own subjective valuation matter? When you find something, what assumptions do you make? Which of these are relevant to the effort you spend reuniting property with the rightful owner?

How do we form moral intuitions over found property and how do those intuitions change when we find cash instead of stuff?

And why would you go to der Waffle Haus when you drive a perfectly good taco truck?


  1. Yet again, I do not claim to be a economist by any means but, wanted to share the thoughts that I had on this. First, why are you going to get hashbrowns at the Waho? Waffles are where it is at. On to the more economic/moral issues. To me, this situation raises the question as to at what point and with what "value" does "selfish-ness" overpower the need to do what is "right". (I do know that there can be debate over what is value, what is selfish-ness and what is right, thus the quotations.) Is there an amount of effort, say standing in line for two days for tickets that would overwhelm the moral "rule" that says that if you find something that belongs to someone else you return it? If so, where is this break? Or is this something that we can even predict at all?

    For me, the outcome would not be different whether it was an item I wanted or whether it was the money. I would return, or leave it where I found it (to allow the next person to struggle with the issue). But, I would say that this would not be the same for everyone.

    I don't have any suggestions on where you could find more examples of the phenomenon but, wanted to share my thoughts.

  2. This is awesome it speaks particularly to eminent domain problems, etc.
    What I read you to be saying is that given the subjective nature of the valuation of property, restitution for wrongfully lost property is difficult for third parties to assign. There will be some arbitrarily chosen amount, in contextually derived dollars, awarded to the plaintiff to be paid by the defendant.
    This further illustrates how the David Friedman approach to policing and courts under anarchy resolves disputes better and more efficiently than the alternative.
    Under anarchy, property could be protected through a contract with a security and insurance agency. Each piece of property might require a stated valuation, with a directly proportional premium attached, controlling for the costs of monitoring the security of that item, etc.
    When the time came to restore wrongfully lost property, the contextually appropriate restitution would be worked out among security-insurance agencies, or a Coasian solution to the bargain between an offer of reward for returned tickets, and subjective value of using the tickets instead of returning them, would be worked out objectively, particularly since the subjective value would have been clearly stated ex ante.


Do you have suggestions on where we could find more examples of this phenomenon?