That people may "irrationally" frame events from reference points has numerous implications for the positive and normative analysis of law. Take, for example, the legal definition of the rights of landowners. The Tversky-Kahneman analysis suggests that through some little-understood process a landowner might come to "vest" a right -- that is, to move his reference point so as to regard the right as something possessed, not as a prospect. This possibility has relevance in many doctrinal pockets of land law.

Consider the takings issue. The Tversky-Kahneman analysis predicts that an ordinary landowner would feel the loss of a psychologically vested right of a given market value more keenly than he would the loss of a prospect (a psychologically unvested right) of identical market value. For example, a farmer would likely regard a government act that expropriated the farmer's fungible crops (of market value $ X) as more damaging than a government act that deprived the farmer of development rights that also had a market value of $ X.

Several strands in the current muddle of takings doctrine seem consistent with an unstated assumption that property that is psychologically vested is more worthy of protection than is property that is psychologically on the horizon. Under current Supreme Court doctrine, a permanent "physical invasion" by government always effects a taking of property (even when the invasion is trivial), while a regulatory restriction on a landowner's prospective activity is highly unlikely to be held a taking even when it causes a massive reduction in property value.

Also instructive are the doctrines that determine when the developer of a real estate project can obtain protection from new regulatory interferences. Under current law, a developer's rights are deemed to vest under the takings clause when it has either obtained a key initial government permit, such as the approval of a preliminary subdivision map, or completed an early stage of construction, such as a building foundation. Apart from the influence of law, these sorts of concrete events may shift the reference points of the developer's executives so that they come to regard the project in question not as a prospect, but rather as a done deal. The lawmakers who have shaped vested-rights law may have been influenced by their anticipation of this psychological reality.