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112 Mich. L. Rev. 1417 (2013-2014)
Personalizing Default Rules and Disclosure with Big Data

handle is hein.journals/mlr112 and id is 1493 raw text is: PERSONALIZING DEFAULT RULES AND
Ariel Porat*
Lior Jacob Strahilevitz**
This Article provides the first comprehensive account of personalized default
rules and personalized disclosure in the law. Under a personalized approach to
default rules, individuals are assigned default terms in contracts or wills that
are tailored to their own personalities, characteristics, and past behaviors.
Similarly, disclosures by firms or the state can be tailored so that only infor-
mation likely to be relevant to an individual is disclosed and information
likely to be irrelevant to her is omitted. The Article explains how the rise of Big
Data makes the effective personalization of default rules and disclosure far
easier than it would have been during earlier eras. The Article then shows how
personalization might improve existing approaches to the law of consumer
contracts, medical malpractice, organ donation, inheritance, landlord-tenant
relations, and labor law.
The paper makes several contributions to the literature. First, it shows how
data mining can be used to identify particular personality traits in individu-
als, and these traits may in turn predict preferences for particular packages of
legal rights. Second, it proposes a regime whereby a subset of the population
(guinea pigs) is given a lot of information about various contractual terms
and plenty of time to evaluate their desirability, with the choices of particular
guinea pigs becoming the default choices for those members of the general
public who have similar personalities, demographic characteristics, and pat-
terns of observed behavior. Third, we assess a lengthy list of drawbacks to the
personalization of default rules and disclosure, including cross subsidization,
strategic behavior, uncertainty, stereotyping, privacy, and institutional-com-
petence concerns. Finally, we explain that the most trenchant critiques of the
disclosure strategy for addressing social ills are really criticisms of impersonal
disclosure. Personalized disclosure not only offers the potential to cure the ills
* Alain Poher Professor of Law, Tel Aviv University; Fischel-Neil Distinguished Visiting
Professor of Law, University of Chicago Law School.
** Sidley Austin Professor of Law, University of Chicago Law School. The authors thank
Michael Abramowicz, Omri Ben-Shahar, Yitzhak Benbaji, Eyal Benvenisti, Michael Birnhack,
Tony Casey, Hanoch Dagan, Giuseppe Dari-Mattiacci, Lee Fennell, Talia Fisher, Olga
Frishman, James Grimmelmann, Sharon Hannes, Todd Henderson, Aziz Huq, Ehud Kamar,
Amir Khoury, Shay Lavie, Saul Levmore, Yoram Margalioth, Jonathan Masur, William
McGevern, Gideon Parchomovsky, Eric Posner, Adam Samaha, Max Stearns, Cass Sunstein,
and Lauren Willis, as well as workshop participants at the University of Chicago, the
Interdisciplinary Center at Herzliya, Tel Aviv University, Northwestern's Kellogg School of
Management, the University of Maryland, the Privacy Law Scholars Conference, and the
annual meeting of the American Law and Economics Association for helpful conversations and
comments. The authors would also like to thank Julian Dibbell, Jack Grein, and Omer
Yehezkel for inspired research assistance, as well as the Russell J. Parsons Faculty Research
Fund for generous research support.


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