Identifying intense preferences

People's preferences vary in intensity: some are strong while others are weak. Information regarding the strength of preferences is essential to legal policymaking for reasons of both efficiency and fairness. The goal of efficiency maximization requires allocating goods to those who value them most; it seems unfair to grant an entitlement to a person who is comparatively indifferent to receiving it rather than to one who intensely desires it. However, identifying strong preferences is no easy task. Individuals may strategically misrepresent the intensity of their preferences to improve their position. In recent years, the law-and-economics literature has largely focused on one aspect of this issue: the case of owners' subjectively high valuation of land. Several scholars have proposed various techniques, which rely on self-assessments, to detect people's true preferences. These techniques require case-by-case inquiries, involve monetary payments, and employ sanctions to ensure truthfulness. This Article argues that the land-valuation problem is but a specific manifestation of a much broader concern. The need to identify intense preferences arises in all fields of law, and with respect to all types of entitlements. More importantly, fundamentally different methods can be used to detect strong preferences. Identifiers may be generalized rather than case specific, entail in-kind burdens rather than monetary ones, and adopt nonpenalizing rather than penalizing approaches. Legal rules, as this Article demonstrates, can employ generalized and nonpenalizing (GNP) devices to identify intense preferences. Such identifiers include use value vs. exchange value, possession, declining marginal utility, redemption, and reasons-requirement. These identifiers tacitly underlie a variety of rules governing such diverse issues as rights of first refusal, takings compensation, self-help remedies, children 's adoption, secured transactions, and conscientious objection. The Article further argues that GNP identifiers are superior to alternative techniques. It compares GNP devices to four other methods: "Mouth" (reliance on people's verbal statements alone); "Mouth and Purse" (verbal statements backed up by monetary sanctions); "Generalized and Penalizing" (generalizations that utilize willingness to bear in-kind sanctions); and "Case-Specific and Penalizing" (case-by-case detection via readiness to incur nonmonetary burdens). GAP techniques score highly on all parameters of evaluation. They treat people with dignity and respect, afford equal treatment to their preferences, do not favor the rich, and at the same time, mitigate the risk of lies. In addition, GNP methods entail relatively low administrative costs and can contend with objectionable preference-intensities.