Random Selection for Scaling Standards

By Michael Abramowicz. Full Text. 

Governments distributing funds among many claimants often fail to ensure that those similarly situated are treated similarly. This Article proposes a novel solution that would reduce both adjudication costs and adverse effects of idiosyncratic decisionmaking. Claimants to a fund would sell their claims to intermediaries, and a small number of claims would then be chosen at random for valuation in adjudication. The entire fund would be distributed to the intermediaries in proportion to their adjudicated valuations. Intermediaries will thus bid more for claims, the higher the valuations that they expect the claims to receive on average. This mechanism can enable the creation of administrative schemes that might be infeasible with a traditional administrative design, which cannot accommodate massive numbers of claims covering circumstances too heterogeneous to reduce to rules. The Article illustrates by describing several possible applications, concerning issues related to climate change and pandemic response. The random selection mechanism allows rapid creation of administrative schemes that can take into account many subtle considerations that regulations could not easily address in a more conventional administrative program.