The role of institutions in the revival of trade: the law merchant

  title={The role of institutions in the revival of trade: the law merchant},
  author={Paul R. Milgrom and Douglass Cecil North and Barry R. Weingast},
A good reputation can be an effective bond for honest behavior in a community of traders if members of the community know how others have behaved in the past – even if any particular pair of traders meets only infrequently. In a large community, it would be impossibly costly for traders to be perfectly informed about each other's behavior, but there exist institutions that can restore the effectiveness of a reputation system using much less extensive information. The system of judges used to… Expand

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