Redistribution through Property Law

This chapter explains the importance of property for promoting equality in society and enhancing people's well-being. It then addresses the major legal debate regarding the method that should be used to redistribute welfare. There is much controversy in the literature as to whether redistribution should be attained solely through taxes and transfer payments (such as progressive taxation and cash assistance to needy families) or also via substantive rules of private law, including property law. The chapter shows how various behavioral phenomena support the use of private law rules alongside taxes and monetary transfers, with applications to two central property law issues: the choice of a family property system and compensation for takings of land.

Discrimination and Exclusion

This chapter reconsiders the persistent problems of discrimination and exclusion in light of psychology research on prejudice and bias. It focuses on three important topics in housing and land use law. First, it examines whether disparate impact claims (i.e., discrimination claims against facially neutral housing policies that have discriminatory effects but lack evidence of discriminatory intent) have the potential to redress implicit, largely unconscious bias. Second, it describes how psychology research on the effect of perceived social norms on prejudice lends support to a controversial provision of the US Fair Housing Act, which prohibits discriminatory housing advertisements and statements. Third, the chapter discusses how psychology research can inform, and ameliorate, exclusion and discrimination in neighborhood and block associations charged with budgeting, zoning, or spending powers.

Transacting Property

This chapter examines how the psychology of cognition, decision making, and deception affects buyers and sellers in real estate transactions. The chapter describes how some aspects of property law, such as standardized forms of property (e.g., fee simple ownership, leasing) may reduce information-processing costs and enhance understanding of transactions. Yet other laws, such as property defect disclosure, fail to respond to buyers who struggle to process, update, and price complex, late-coming information and sellers who are subject to motivated reasoning and tendencies toward deception. The chapter also considers emerging psychological evidence on conflicts of interest that calls into question the prevailing approach of allowing dual agency by brokers (i.e., representing both buyer and seller).

Takings

This chapter discusses key aspects of takings law from a behavioral perspective and employs psychological insights to critically analyze existing legal rules and theories. The chapter highlights various factors that affect the perceived legitimacy of the taking and its adverse impact on property owners. In addition, the chapter addresses two central topics from a behavioral perspective: (1) When should compensation be paid? and (2) what constitutes just compensation? It shows that current compensation rules unjustifiably distinguish between different types of injuries to property, and that the risk of systematic undercompensation of property owners is more severe than commonly realized. These phenomena may have detrimental effects in terms of both efficiency and fairness.

In-Kind Remedies versus Monetary Remedies

All legal systems must design remedies for rights violations, including property rights. In this context, one of the most common choices is between monetary remedies and in-kind remedies. In reality, monetary compensation is the most common form of redress for rights violations. This chapter questions the conventional wisdom that people are ordinarily indifferent between monetary and nonmonetary remedies, focusing on remedies relating to property. There is experimental evidence that people prefer in-kind remedies to monetary ones, even when the remedy concerns nonunique and easily replaceable assets. The chapter applies the psychological insights to remedies for wrongful interference with property, and to land use planning and expropriation of property.

Property Rules versus Liability Rules

This chapter discusses one of the most fundamental issues that every legal system must address: the form of protection that should be given to legal entitlements, including property rights. The chapter summarizes the debate regarding the choice between property rules and liability rules, and its underlying assumptions. It then shows how behavioral studies offer important considerations that should influence the legal discussion. Generally speaking, psychological studies invite more optimism about people's ability to reach mutual agreement under property rules and suggest that miscalculations of damages under liability rules may be a graver danger than presently realized. These studies caution us against increasing the use of liability rules and lend additional support to the use of property rules when transaction costs are low.

Protecting Homes and Other Types of Property

This chapter questions the tendency of property law to bestow more generous protection against dispossession due to debts or other losses to residential property than to personal or commercial property or leasehold interests (i.e., renters). Contrary to this pattern in property law, the empirical psychology research on homes suggests only moderate psychological importance to maintaining ownership of one’s particular home, and substantial attachments and psychological interests in personal and commercial property. From the perspective of psychological loss, the strong property protection afforded to homes under tenancy by the entirety and homestead exemptions may be outsized. Conversely, the more limited protection of personal property and compensation for its loss under laws such as bankruptcy exemptions and bailment may be inadequate.

Conclusion

The conclusion reviews some of the major themes of the book and then delves into the implications for legal reform. This part of the book describes future directions, and challenges, for psychology-informed property law and highlights productive areas of further psychology research. Key areas for future research include more applied research of people engaged in property conflicts, transactions, litigation, and other real-world contexts of property law and experiments investigating whether there are cultural differences in perceptions of property rights, valuation, and remedies. Other fruitful areas for future research include psychological perceptions of ownership, possession, and dispossession and conflicts between owners and possessors, factors affecting complaints and reporting of housing discrimination, and research replicating and expanding the empirical work on psychological preferences for remedies.

Ownership and Possession

This chapter addresses the psychological significance of ownership and possession and explores how people perceive them. It shows that an individual’s notion of possession is not necessarily physical but may extend to intangible entitlements and expectations. This state of affairs may support a broadening of the law’s understanding of possession. In addition, the chapter analyzes the relative strength of ownership and possession, which is highly relevant to conflicts between owners and possessors, including the doctrines of first possession and adverse possession. The chapter also employs psychological insights to justify seemingly paradoxical legal rules, according to which owners have more freedom to use their property intensively than to refrain from using it at all, more freedom to restrict the transfer of property totally than to subject it to conditions, and more freedom to destroy the property than to modify or change it.

Introduction

This chapter describes the goals of the book and introduces the reader to fundamental features of property law. The introduction first provides background on the nature and function of property rights and offers a brief overview of the field of property law. Moving to property theory, the introduction summarizes the major justifications for private property. The introduction also briefly reviews statistics on the volume and value of property transactions and discusses the frequency and characteristics of property litigation in the US. Next, the introduction previews some of the key applications of psychology to property law addressed in the book and describes the book’s scope and interdisciplinary, empirically-based approach.