Arrunada Seminar: Matteo Rizzolli – Will ICT Make Registries Irrelevant?
23 January 2013 at 6:15 am Lasse 1 comment
| Matteo Rizzolli |
Will ICT Make Registries Irrelevant?
With this brief post, I would like to add some further discussion on the role of new technologies and ICTs for the evolution of registries. The book of Prof Arrunada touches upon the issue in chapter 7 where the role of technical chance is tackled. He discusses mainly the challenges in implementing different degrees of automation in pre-compiling and lodging information from interested parties and even in automating decision-making by the registry itself.
These challenges represent the costs of introducing ICTs in registries. In the book the benefits of ICTs for abating the costs of titling/recording are not discussed at length. Think of them in terms of the costs of gathering, entering, storing, organising and searching the data. I assume it is trivial to say that ICTs decrease the fixed and variable costs of registries even when some issues raised in the book are considered. In terms of the figure below (my elaboration of figure 5.1 on pg 133) this is equivalent to say that, thanks to ICTs, the black line representing the “Value of land under public titling” shifts upwards and therefore the “Indifference point for individual titling decisions” shifts leftward and makes registries more desirable.
However, i think that an important effect of ICTs is neglected in this analysis. In fact ICTs are now pervasive in most transactions. Land is observed with all sorts of satellite technology and the movement of objects and people is traced in many ways. Communications, both formal and informal are also traced and information on companies is just one click away for most individuals. I don’t want to discuss philosophical, sociological or legal aspects of this information bonanza. Neither neglect that more information doesn’t mean better or more trustworthy information. On the other I think we can agree that the quantity of information available to counterparts of a transaction is greatly increased and -more important- that verifiable evidence can be produced more easily should legal intervention in case of conflict arise.
All this information windfall may -this is my hypothesis- decrease the costs of keeping transactions out of registries and therefore improve the value of transactions under privacy. In terms of the figure below, this amounts to rotating the red line upwards and, as a result, shifting the “Indifference point for individual titling decisions” on the right.
In a sense, ICTs both i) decrease the costs of registries and ii) makes registries less relevant. On balance, it is hard for me to say which effect of ICTs may prevail. I think however this could be a very interesting empirical question to research.
Matteo Rizzolli. Assistant Professor of Law and Economics at the Free University of Bozen, Italy. Board member and secretary of the European Law & Economics Association
Click figure for higher resulution:
Entry filed under: - Lien -, Institutions, Law and Economics, New Institutional Economics, Theory of the Firm.
Organizations and Markets 
1.
Benito Arruñada | 23 January 2013 at 9:31 am
Thank you for the post. In principle, one would tend to agree with Professor Rizzoli that ICTs (information and communication technologies) should always reduce information costs and, consequently, move the lines upwards, reducing the incidence of title conflicts and increasing the value of land. However, the sign of these effects is not always clear. For instance, poorly designed ICTs might facilitate title fraud. A possible example could be the “agency registration” case mentioned by professor Thomas in his post (http://ow.ly/h1mQV). In general, it is worth keeping in mind that ICTs may often reduce the information costs of fraudsters. From its very inception, public registries suffered the risk of being misused, which is why access to registry information must be carefully managed.
With respect to the effects of ICTs on the equilibrium between privacy and public titling, I think the things are clear: To the extent that ICTs do reduce the costs of public titling, which should be the case when new technologies are properly organized, the upward impact should be substantial for public tiling and negligible for privacy. The reason is that privacy faces an insurmountable problem, which is not merely one of transferring or even analyzing information, but of secrecy: under privacy, property rights are enforced in rem on the basis of contracts that may remain private¬ information to the parties. It is doubtful how ICTs can make a difference in this key dimension. Take, for example, the possibility of secret mortgages: if a mortgage could be enforced in rem, third parties would not necessarily know about them, and would be understandably reluctant to contract.