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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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