Sizing Up Categories
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Lee Anne Fennell
Abstract
Categories intentionally create discontinuities. By breaking the world up into cognizable chunks, they simplify the information environment. But the signals they provide may be inaccurate or scrambled by strategic behavior. This Article considers how law might approach the problem of optimal categorization, given the role of categories in managing and transmitting information. It proceeds from the observation that high categorization costs can be addressed through two opposite strategies—making classifications more fine-grained (splitting), and making classifications more encompassing (lumping). Although continuizing and other forms of splitting offer intuitive answers to inaccurate classification and gaming along category lines, lumping is sometimes a better solution. If category membership carries multiple and offsetting implications, the incentive to manipulate the classification system is dampened. To take a simple example, insurance that covers only one risk is more vulnerable to adverse selection than is an insurance arrangement that covers two inversely correlated risks. Making categories larger, more durable, and more heterogeneous can produce such offsets. These and other forms of bundling can arrest damaging instabilities in categorization.
© 2021 by Theoretical Inquiries in Law
Articles in the same Issue
- Frontmatter
- Introduction
- Sizing Up Categories
- Disorder and Discontinuity in Law and Morality
- Continuity in Morality and Law
- Half the Guilt
- Line Drawing in the Dark
- Discontinuities in Criminal Law
- All-or-Nothing, or Something – Proportional Liability in Private Law
- Proof Discontinuities and Civil Settlements
- Probabilistic Disclosures for Corporate and other Law
- The Charitable Continuum
- Changing Places, Changing Taxes: Exploiting Tax Discontinuities
Articles in the same Issue
- Frontmatter
- Introduction
- Sizing Up Categories
- Disorder and Discontinuity in Law and Morality
- Continuity in Morality and Law
- Half the Guilt
- Line Drawing in the Dark
- Discontinuities in Criminal Law
- All-or-Nothing, or Something – Proportional Liability in Private Law
- Proof Discontinuities and Civil Settlements
- Probabilistic Disclosures for Corporate and other Law
- The Charitable Continuum
- Changing Places, Changing Taxes: Exploiting Tax Discontinuities
