I Can't Live (With or Without You)

Last night’s episode of Grey’s Anatomy almost – but not quite – raised a fascinating philosophical and economic problem. A pair of conjoined twins were planning to have a separation operation. The surgery involved a considerable risk of death to both twins. One of them actually wanted to get separated; the other agreed only because “I don’t want to be attached to someone who doesn’t want to be attached to me.” But what if the second twin had not agreed? Would one twin’s consent have been sufficient, or would both twins’ consent have been required?

Put differently, the question is what kind of property the twins have in their shared body parts: a commons (joint rights of use, only one party’s consent is required) or anti-commons (joints rights of exclusion, both parties’ consent is required)? Both regimes have their problems. Commons property encourages externalities – in this case, imposing a risk of death on an unwilling party. Anti-commons encourages hold-outs – in this case, a refusal to allow someone who really wants out to leave.

The Coase Theorem would suggest that it really doesn’t matter, so long as transaction costs are low. Suppose the gain from separation to twin #1 exceeds the loss (in risk of death) to twin #2, meaning it’s efficient to separate. Under commons, twin #1 simply demands the separation; under anti-commons, twin #1 pays twin #2 enough to make the risk worth his while. On the other hand, suppose the loss (in risk of death) exceeds the gain from separation, so it’s efficient to stay together. Under anti-commons, twin #2 will simply refuse to allow the surgery; under commons, twin #2 will pay twin #1 enough to induce him to stay.

However, the existence of a bilateral monopoly (one buyer, one seller) means the transaction costs could actually be high, thus stymieing the necessary Coasean bargains. We might hope that two people literally joined at the hip would be able to bargain effectively. But that might not be the case when one twin is unhappy enough to want to leave. If we assume transaction costs are prohibitive (not necessarily a good assumption), we should choose the property regime that generates the least expected losses in the absence of a bargain, which in this case would appear to be the anti-commons. Under anti-commons, the worst loss is continuing an unhappy coexistence; under commons, the worst loss is an uncompensated risk of death.

(I'm still thinking about whether this conclusion is consistent with my intuitive reaction to Judith Jarvis Thomson's parable about a person who wakes up attached to a brilliant but ailing concert violinist, which is to say to hell with the violinist.)