Trial By Battle
What can price theory reveal to us about this archaic institution?
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Here at Economic Forces we often argue that price theory can be used to understand just about anything. However, we often confine ourselves to current events or typical topics for economists. Price theory no doubt provides a unique perspective on these topics — and we believe it to be a valuable perspective. Nonetheless, sometimes we need to push the boundaries of what price theory can teach us. Today is one of those days. Today I want to discuss trial by battle.
In 11th and 12th century England, property rights disputes were settled via trial by battle. The way that this worked is that someone who claimed to have the right to particular property would submit a claim of rightful ownership to the king along with corresponding evidence. The king could then grant that the dispute be heard in court. Like a typical modern trial, each party to the dispute would have to bring evidence and witnesses. Given the state of property rights at the time, when disputes did go to court, both parties did often have competing and believable claims to the property. The court therefore had a difficult problem and this is where trial by battle came in.
When the court was faced with claims of property disputes in which both sides had a believable claim to the property, they often turned to trial by battle. The way that this worked is that each party to the dispute would hire a “champion” to fight on their behalf. The two champions would fight to the death or until one of the champions gave up. Victory in battle meant victory in the property dispute.
Many look back on this practice now and either laugh at the preposterousness of it all or shudder at the primitive nature of our distant human ancestors. In fact, at this point, most readers are probably asking what price theory can possibly teach us about this. Pete Leeson tells us.
If one thinks about property rights disputes, the first thing that comes to mind is the Coase Theorem. In a world without transaction costs, one could simply let the two parties negotiate a solution. The party that valued the property most would have a higher willingness to pay. That party could simply buy out the other party and the property ends up being allocated to its most valued use. However, as the Coase Theorem suggests, if there are significant transaction costs, the initial allocation of the property is likely to persist regardless of whether the initial allocation is the most-valued use.
England’s feudal system made transactions costs significant. The king allocated land to lords in exchange for their willingness to defend that property from outside invaders. The lords then allocated land to tenants. Property could be transferred by the tenants by selling the rights to some or all of the property or by leaving the property to one’s heirs. Given the institutional structure of the time, it is not hard to see why such rights granted to the land would come into dispute nor is it hard to see why such disputes would be difficult to resolve. It is not as though there was one central location recording property deeds. In fact, the rights to the property differed substantially from how we would think about property rights today.
What Leeson argues is that although it was difficult to the resolve disputes with documentation or witnesses and although property rights were limited by feudal institutions, the market for champions was a typical market. Someone engaged in a property rights dispute could hire any champion of his choosing for the right price. More experienced and successful fighters commanded higher prices. In addition, when hiring a champion, one could structure the contract in a variety of ways. One could also hire as many champions as one wanted. Although only one could fight, hiring additional champions would prevent one’s opponent from hiring the same fighters. In addition, champions could switch allegiances before the fight if the other party offered more money.
But think about what this means. The willingness to pay for a fighter must be a function of the willingness to pay for the land itself. If one values the land more than the other party to the dispute, then conceivably one should be willing to pay a higher price to hire a champion to improve the odds of winning the dispute. Leeson refers to this process as a sort of “violent auction.” This auction had the additional feature that it discouraged frivolous claims since both parties had to pay their “bid” regardless of the outcome.
In other words, the hiring of a champion is a mechanism to get people to reveal something about their true valuations of the property. Of course, the battle meant that even those with a lower willingness to pay still had a chance to win the dispute. Nonetheless, the reveal of value was what was important. The reason is that most trials by battle were actually ended without a battle. Instead, the two parties settled the dispute prior to battle. Why? Because the hiring of champions revealed private information about the valuations of the property by both parties. Once the champions were known, the parties had some idea about the probability of victory. In that circumstance, with valuations revealed, the parties had an incentive to settle.
In short, the process of hiring the fights had the effect of reducing the transactions costs involved in negotiation. As a result, more negotiations took place and the property ended up in the hands of those who valued it most. Price theory thus enables us to understand what would otherwise appear to be a barbaric and arbitrary practice.