Cartel monitoring substitutes for bank due diligence in diamond financing.
Evidence
In every transaction in which at least one party does not trust the other to comply with the rules, protection becomes desirable, even if it is a poor and costly substitute for trust. This book shows that mafia protection fulfills this role, albeit in an erratic and limited fashion. The market is therefore rational in the sense that there are people who find it in their individual interest to buy mafia protection. While some may be victims of extortion, many others are willing customers. … There is a propensity to reduce cognitive dissonance by reverting to the view of mafiosi as mere extortionists. — Diego Gambetta, The Sicilian Mafia The Business of…, 13 (
#corroborates, via linked claim)
Categorization
Category: Causal Relationships
Related
- A private cartel’s monitoring substitutes for institutional trust and underwrites credit access. (similarity 0.82)
- DeBeers sight-holder status substitutes for bank credit screening (similarity 0.80)
Broader Connections
- DeBeers sight-holder status functions as bankable credit signaling.
#expands(0.85) - Protection substitutes for trust when trust is lacking in transactions
#corroborates(0.78) — Diego Gambetta, The Sicilian Mafia The Business of…, 13