Diamond dealers’ reliance on timely payment makes nonpayment harm exceed its face value.

Evidence

In the context of the diamond market, these conditions seem to hold. The probability that the transactors will have occasion to deal with one another in the future, 4 , is quite high. In addition, many aspects of the industry suggest that the condition that b > c will hold. For example, a diamond dealer generally operates on a slim cash flow margin and has trouble getting access to capital. He routinely makes business decisions in reliance on receiving payment on a particular date. If he is not paid, the harm he suffers can be far greater than loss of the amount of money he is owed. Nonreceipt of payment might force him to breach a contract with another dealer, which will in turn damage his reputation. It might force him into insolvency and result in suspension from the club. — Lisa Bernestein, Opting out of the Legal System, 191

Categorization

• XREF: The reputation/suspension cascades here echo the Sicilian community’s non-cooperation sanctions in the reader’s Sciascia analysis, but inverted — cooperation is the norm in the diamond club. — connects to: The diamond trade’s production cycle structurally requires credit. — Lisa Bernestein, Opting out of the Legal System, 113; Tight cash-flow margins make reliance harms exceed simple owed amounts in the diamond trade — Lisa Bernestein, Opting out of the Legal System, 191
• SEED: Compare how reputation-based enforcement produces cooperation in a market community but silence/deadlock in a political one — both use the same social-mechanism lever to opposite ends.

Related

• Tight cash-flow margins make reliance harms exceed simple owed amounts in the diamond trade (similarity 0.90)
• Diamond trade discipline runs on reputation fear, not arbitration or courts. (similarity 0.84)
• The diamond trade’s production cycle structurally requires credit. (similarity 0.84)
• Reputation, not third-party enforcement, governs diamond market transactions. (similarity 0.79)
• Diamond dealers must pay cutters even when the stone never arrives. (similarity 0.79)
• Paying judgments signals reliability even more strongly than avoiding disputes. (similarity 0.78)

Broader Connections

• Tight cash-flow margins make reliance harms exceed simple owed amounts in the diamond trade #corroborates (0.95) — Lisa Bernestein, Opting out of the Legal System, 191