Lectures on Property and Behavior

Benito ARRUÑADA
http://www.econ.upf.es/~arrunada

Université de Paris X, fall 2004
http://www.u-paris10.fr/
200, av de la République 92001 Nanterre Cedex
salle des Conférences, Bâtiment B

1. The institutions of property rights

Tuesday, October 26 th , 10h30-12H30

Summary:

This lecture will analyze the institutions that make property rights viable, ensuring their enforcement, mobilizing the collateral value of assets and promoting growth. It will start by examining the literature on contractual and property rights, focusing on the key issue that property rights are enforced in rem , being affected only with the consent of the right holder. This ensures enforcement but is costly when multiple, potentially colliding rights are held in the same asset. The institutions for reducing the cost of gathering consents to overcome this trade-off of enforcement benefits for consent costs will then be analyzed: recording of deeds with title insurance, registration of rights and even a regimen of purely private transactions.

References:

  • Arruñada, B. (2003), "Property Enforcement as Organized Consent," Journal of Law, Economics, and Organization , 19 (2), 401-44. (Mainly pp. 401-23).
  • Arruñada, B. (2004), "Property versus Contractual Rights: A Comparative Analysis across Assets," prepared for the 8 th Annual Conference of the International Society for New Institutional Economics, ISNIE , Tucson AZ, September.

2. Comparative analysis and organization of titling Institutions

Tuesday, October 26 th , 15:00-17:00

Summary:

The three basic titling institutions (private transactions, recording of deeds and registration of rights) will be analyzed by, first, proving that they provide similar services and comparing how their relative performance varies with the number of transactions, the risk of political opportunism and regulatory consistency. Second, key elements of their organization will be explored, showing the rationality of allowing competition in the preparation and support of private contracts while requiring territorial monopoly in recording and registration activities, this to ensure independence and protect third parties.

  • Arruñada, B. (2003), "Property Enforcement as Organized Consent," Journal of Law, Economics, and Organization , 19 (2), 401-44. (Mainly pp. 423-44).
  • Arruñada, B. (2002), "A Transaction Cost View of Title Insurance and its Role in Different Legal Systems," The Geneva Papers on Risk and InsuranceóIssues and Practice , 27 (4), October, 582-601.
  • Arruñada, B., and N. Garoupa (2004), "The Choice of Titling System in Land," Universitat Pompeu Fabra, Economics and Business Working Paper Series 607, revised: June 2004.

3. Human Nature and Property

Tuesday, October 28 th , 10:30ñ12:30

Summary:

It will first review basic findings in cognitive sciences with respect to rationality and cooperation and examine its consequences for the analysis of institutions. Second, it will explore the cognitive constraints faced in the application of basic principles of property law. In particular, while a simple property rule fits well with the psychology of property, both the allocation of property and contractual rights on the basis of publicity and, even more, the application of a liability rule under registration may contradict the instincts active in this area.

References:

  • Arruñada, B. (2004), "Human Nature and Institutions," in preparation for Introduction to New Institutional Economics (Jean-Michel Glachant and Eric Brousseau, eds.).
  • Arruñada, B. (2004), "Cognitive Constraints on Property Law," draft presented at the Symposium on "Behavioral Building Blocks of Free Enterprise," Gruter Institute for Law and Behavioral Research, Squaw Valley , May 24-25.
  • Arruñada, B., and V. Andonova (2004b), "Judges' Cognition and Market Order," Universitat Pompeu Fabra, Economics and Business Working Paper Series 768, July.

4. Is There a Need for Lawyers in Conveyancing? (Forum seminar)

Tuesday, October 26 th , 16:00ñ18:00

Summary:

Intervention by lawyers and notaries has become unnecessary for supporting much of private contracting in real property. Public titling made them unnecessary with respect to rights held by third parties. Recording of deeds made them redundant as depositories of deeds and reduced demand for them to design title guarantees. And registration of rights supplanted them fully for gathering the consent of affected third parties. More recently, information technologies have been making authentication services by notaries relatively ineffective. Furthermore, large, reputed parties and standardized transactions make qualified conveyancers unnecessary for protecting parties to private contracts from each other. These arguments are supported by disentangling the logic of titling systems, showing that title insurance premiums (a proxy of conveyancing quality) are greater in those US states which still require lawyers to prepare the deeds, and measuring the increased standardization of documents notarized in Spain during the 20 th century.

Reference:

  • Arruñada, B. (2004), "Is There a Need for Lawyers in Conveyancing," Universitat Pompeu Fabra, paper presented at the Ninth EU Competition Law and Policy Workshop, Florence, 11-12 June 2004.