100 Iowa L. Rev. 2255 (2015)

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Abstract

Property rights are often referred to as “evolving,” but the term is usually used to signify a gradual process of change rather than one based on Darwinian evolutionary theory. Because property rights go through processes of variation, selection and replication, a more rigorously evolutionary approach can improve our understanding of how property rights change over time. This Essay uses fitness landscapes to model the problem of searching for fit design of property rights. This approach interprets a bundle of rights as a bit string of zeros and ones that encodes for the actual property rights much like a genome encodes a phenotype. The shapes of the fitness landscapes over which the bundle of rights evolves characterize the nature of the search process. The key determinant of the shape is the number of interconnections among the different sticks in the bundle. Smooth singlepeaked landscapes (no interconnections) represent easy search processes that have a good single optimal design. Random landscapes (maximally interconnected) portray a situation where there are a near-infinite number of low fitness designs. Instead of taking place at the extremes of smooth or random landscapes, property rights evolve in the interesting in-between where landscapes are rugged. This represents situations where there is a danger of getting stuck on suboptimal peaks, but where evolution (variation, selection and replication) is a particularly adept at finding good design. When the fitness contributions of the rights in the bundle are additionally affected by other laws, rules, and institutions that are coevolving, the landscape is not static but dances, changing over time. Coevolution favors property rights that are good at adapting to new conditions.