Manipulation

Abstract

This chapter examines a potential distortion that personalized rules might breed: manipulation. Anticipating ways in which their personal traits might affect their legal treatment, people could make socially undesirable choices in order to qualify for more favorable commands. If, for example, one’s investment in improved technical skills leads to an increase in the personalized standards of care under tort law, the incentives to invest might be chilled. The chapter examines various forms of manipulation. It first discusses the distorted incentive to develop human capital. It then explores the possibility of “pretending”—people’s attempts to change not their underlying traits but their appearance. It also demonstrates a third problem, “arbitrage,” where people circumvent the personalized treatment by operating through agents or purchasing superior legal treatments from others. Recognizing this array of manipulative strategies, the chapter than offers two responses. It argues that the scope of the manipulation problem is minor, first because each personal trait has typically only a small incremental effect on any legal command. Second, in cases where manipulation is potentially significant, non-manipulable inputs could be used.