Journal ArticleDOI
The role of institutions in the revival of trade: the law merchant, private judges, and the champagne fairs
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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.Abstract:
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 enforce commercial law before the rise of the state was such an institution, and it successfully encouraged merchants (1) to behave honestly, (2) to impose sanctions on violators, (3) to become adequately informed about how others had behaved, (4) to provide evidence against violators of the code, and (5) to pay any judgments assessed against them, even though each of these behaviors might be personally costly.read more
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Book
Comparative Economic Organization: The Analysis of Discrete Structural Alternatives
TL;DR: Williamson as discussed by the authors combines institutional economics with aspects of contract law and organization theory to identify and explicate the key differences that distinguish three generic forms of economic organization-market, hybrid, and hierarchy.
Journal ArticleDOI
International Norm Dynamics and Political Change
TL;DR: The authors argue that norms evolve in a three-stage "life cycle" of emergence, cascades, and internalization, and that each stage is governed by different motives, mechanisms, and behavioral logics.
Posted Content
The Mechanisms of Governance
TL;DR: The Mechanisms of Governance as discussed by the authors is an important work in the field of transaction cost economics, a branch of the New Institutional Economics with which Oliver Williamson is especially associated.
Journal ArticleDOI
Collective Action and the Evolution of Social Norms
TL;DR: The Logic of Collective Action (LCA) as mentioned in this paper was a seminal work in modern democratic thought that challenged the assumption that groups would tend to form and take collective action in democratic societies.
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The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms
TL;DR: Online feedback mechanisms harness the bidirectional communication capabilities of the Internet to engineer large-scale, word-of-mouth networks as discussed by the authors, which has potentially important implications for a wide range of management activities such as brand building, customer acquisition and retention, product development and quality assurance.
References
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Book ChapterDOI
Efficiency Wage Models of the Labor Market: Equilibrium Unemployment as a Worker Discipline Device
Carl Shapiro,Joseph E. Stiglitz +1 more
TL;DR: In this article, the authors show that the information structure of employer-employee relationships, in particular the inability of employers to costlessly observe workers' on-the-job effort, can explain involuntary unemployment as an equilibrium phenomenon.
Journal ArticleDOI
The Role of Market Forces in Assuring Contractual Performance
Benjamin Klein,Keith B. Leffler +1 more
TL;DR: The conditions under which transactors can use the market (repeat-purchase) mechanism of contract enforcement are examined in this article, where increased price is shown to be a means of assuring contractual performance.
Journal ArticleDOI
Premiums for High Quality Products as Returns to Reputations
TL;DR: In this article, an equilibrium price-quality schedule for markets in which buyers cannot observe product quality prior to purchase is derived, and the effects of improved consumer information and of a minimum quality standard on the equilibrium price quality schedule are studied.
Journal ArticleDOI
The Folk theorem in repeated games with discounting or with incomplete information
Drew Fudenberg,Eric Maskin +1 more
TL;DR: This article showed that the Folk Theorem always holds in two-player games with no discounting at all, and that it always holds even in the case of infinite repeated games with two players.
Journal ArticleDOI
An evolutionary approach to norms
TL;DR: In this article, the emergence and stability of behavioral norms in the context of a game played by people of limited rationality is analyzed with a computer simulation based upon the evolutionary principle that strategies shown to be relatively effective will be used more in the future than less effective strategies.