The Information Costs of Exclusion

Jonathan Sarnoff

Law Clerk to the Hon. Michael A. Chagares, Chief Judge, United States Court of Ap-peals for the Third Circuit; Ph.D., Department of Philosophy, University of Michigan at Ann Arbor (2022); J.D., Yale Law School (2020).

The views expressed in this Article are those of the author alone; they do not reflect the opinions of the federal judiciary or of any of its members. An earlier version of this Article was presented in spring 2020 to the Yale Law School Center for Private Law Student Scholarship Workshop, and in fall 2020 to the University of Michigan Philosophy Department Candidacy Seminar. I am grateful to Dhruv Aggarwal, Lingxi Chenyang, Shlomo Klapper, Mitchell Jonston, Daniel Markovits, Przemysław Pałka and Maren Woebbeking for their comments on the former occasion, and to Lingxi Chenyang, Mercy Corredor, Brendan Mooney, Sumeet Patwardhan, Caroline Perry, Ariana Peruzzi, Laura Soter, Alvaro Sottil de Aguinaga, Angela Sun, Jamie Tappenden, and Elise Woodard for their comments on the latter occasion. In addition, I would like to thank Rachel Brown, Gabriel Mendlow, Henry Smith, Brian Weatherson, and James Whitman for the generous, detailed, and enormously helpful advice they gave me during the process of revising this Article, which has benefited it tremendously. Lastly, I would like to thank Robert Ellickson, who supervised this project at its origin and whose guidance substantially influenced the form it takes today.

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The appropriate scope of the right to exclude is among the most contentious topics in property theory: while some defend direct state regulations that override owners’ right to exclude unwanted uses from their property, others defend greater deference to owners’ authority, implemented by stringent enforcement of the right to exclude. In recent years, scholars who favor exclusion have developed novel arguments to support it by focusing on the information costs of property. Because everyone must respect property rights, those rights must be simple enough for everyone to understand their content. And the right to exclude, which requires everyone to keep off property unless the owner allows them on, is simple enough to be understood easily by those who must respect it. Thus, these theorists conclude, the information costs of property favor respecting the right to exclude.

This Article defends an alternative analysis of how the information costs of property bear on the proper scope of exclusion. Legal rules generate two kinds of information costs: the costs of learning rules and the costs of applying them. While simpler rules may be easier to learn, they need not be easier to apply. Instead, a rule is easy to apply if individuals can easily determine whether a particular action would violate it, which requires the rule to define violations in terms of facts that are easy for individuals to ascertain. Once the costs of applying the right to exclude are considered, I claim, the law sometimes reduces information costs not by respecting exclusion but rather by restricting it.

The right to exclude prohibits nonowners from crossing property boundaries without the owner’s consent. Thus, it defines violations primarily in terms of two facts—whether an action crosses a boundary and whether the owner has consented. While it can thus be applied cheaply if these facts are easy to ascertain, it will be costly to apply if not. When individuals would struggle to determine whether an action would cross a parcel boundary, direct regulation of permissible uses may reduce information costs even though it overrides exclusion—as has occurred with activities ranging from airplane overflights to oil and gas production and urban land development. Similarly, because owners’ mental states are often difficult to identify, rules conditioning property access on owner consent can impose substantial information costs, which can be reduced by mandating access to property open to the public at large, regardless of owner consent. Information costs do not uniformly support greater exclusion, then, as exclusion’s defenders have argued; rather, those costs sometimes favor restricting it.

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