The Creativity Effect

Intellectual Property, Copyright and Trademark and Patents

Article Snapshot

Author(s)

Christopher J. Buccafusco and Christopher Sprigman

Source

University of Chicago Law Review, Vol. 78, No. 1, pp. 31-52, Winter 2011

Summary

The authors present results showing a “creativity effect” in created work and a resulting need for changes in IP law.

Policy Relevance

The “creativity effect” results in an overvaluation of created work on the part of the creator relative to what a buyer is willing to pay. This effect, which is often accompanied by the “endowment effect” in owners of created work, causes market inefficiencies in intellectual property law that may require legal changes.

Main Points

  • Intellectual Property (IP) law creates rights based on property rules that allow an owner to exclude others because IP law has traditionally favored market price setting, and traditionally assumed that people act rationally.
     
  • Behavioral and social psychology have altered the assumptions of classic economic theory by showing that people place a substantially higher value on goods if they own them than if they are thinking about buying them.
     
  • The “endowment effect” is the name given to the discrepancy between what a person is willing to sell property they own for and what another person is willing to pay for that property.
     
  • The authors set up an experiment with painters who had made significant creative effort in their paintings to test a “creativity effect” hypothesis—that the “creativity effect” would be greater than the “endowment effect.”
     
  • The authors found the “creativity effect” did greatly outweigh the “endowment effect” when the creators had expended significant effort to create, but this was not necessarily correlated with emotional attachment to the creation or to the number of hours worked in creating the work.
     
  • The “creativity effect” appears to stem largely from overly optimistic and irrational biases. This means that IP law ought to have a role in reducing such biases.
     
  • Over optimism may have a positive role early on in the creative process by encouraging creativity against long odds. However, when it comes time to bargain, the large gap may make agreements difficult to reach.
     
  • An IP law structure focused around liability rules for use rather than property rules excluding use may more effectively mitigate the “endowment” and “creativity” effects.
     

 

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