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12 J. Legal Analysis 1 (2020)

handle is hein.journals/jlegan12 and id is 1 raw text is: BEYOND INFORMATION COSTS: PREFERENCE FORMATION AND THE ARCHITECTURE OF PROPERTY LAW Taisu Zhang* ABSTRACT Contemporary property theory highlights information costs as the central determinant of exclusion rights and numerus clausus-type standardization: rising information costs lead to stronger exclusion rights and more standardization, whereas falling information costs have the opposite effect. This paradigmatic model lacks, however, a theory of how information costs change in the first place. By developing such a theory, this art- icle demonstrates that, in prominent cases, the legal impact of information costs tends to be counterbalanced by concurrent changes in individual preference, and that preex- isting predictions about the relationship between information costs, standardization, and exclusion are therefore partially wrong, and otherwise incomplete. 1. INTRODUCTION Across much of the modern world, a core feature of property systems is what some scholars have called the numerus clausus principle: only a finite num- ber of property forms are legally allowed at any given point in time. As a large amount of scholarship-associated most prominently with Henry Smith and Thomas Merrill-has pointed out, there are both costs and benefits to such legal standardization: it usually frustrates the individual preferences of some property owners, but also generates substantial information cost savings by lowering the measurement costs associated with property transactions * Professor, Yale Law School, 127 Wall Street, Room M15, New Haven, CT 06511, (203) 436-4796, E-mail: taisu.zhang@yale.edu. For comments and suggests, I thank Bruce Ackerman, Karen Bradshaw, Robert Ellickson, Richard Epstein, Lee Anne Fennell, Oona Hathaway, Daniel Markovits, Jedidiah Purdy, Carol Rose, David Schleicher, Alan Schwartz, Scott Shapiro, Henry Smith, James Whitman, Katrina Wyman, Xiaoxue Zhao, two anonymous referees, the editors of the Journal of Legal Analysis, and participants of workshops at the 2018 American Law and Economics Association Annual Meeting, Yale, New York University, Peking University, Tsinghua University, Renmin University, and Brooklyn Law School. I thank Zhiang Song, Joshua Wilson, and Youlin Yuan for excellent research assistance. Needless to say, all mistakes are my own. © The Author(s) 2020. Published by Oxford University Press on behalf of The John M. Olin Center for Law, Economics and Business at Harvard Law School. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.permissions@oup.com doi:10.1093/jla/laz007

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