Extralegal contracts need cheap formalities to signal agreements to the group.
Evidence
In a market where enforcement depends on social ostracism or reputational damage, the formation of an extralegal contract depends on information about reputation. In addition, it requires adherence to enough formalities to alert other members of the relevant group that an agreement has taken place. In the diamond industry this function is served by customs such as handshakes, cachets, weight slips, and bills of sale that are able to effectively serve the channeling, cautionary, and evidentiary functions of formality while imposing minimal additional cost. — Lisa Bernestein, Opting out of the Legal System, 134
Categorization
- XREF: The ‘channeling, cautionary, evidentiary functions of formality’ frame is useful against the reader’s Sicilian context—where the piazza’s informal sanctions do the evidentiary work the state cannot, but via violence rather than cheap customs. — connects to: Extralegal contracting needs reputational information plus cheap formalities to signal formation.; Extralegal reputation-based contracting can work in large markets when information flows cheaply. — Lisa Bernestein, Opting out of the Legal System, 178; Cheap legal contracts still depend on extralegal reputation bonds — Lisa Bernestein, Opting out of the Legal System, 140
Broader Connections
- Extralegal contracting needs reputational information plus cheap formalities to signal formation.
#expands(0.95) - Cheap legal contracts still depend on extralegal reputation bonds
#responds-to(0.80) — Lisa Bernestein, Opting out of the Legal System, 140 - Extralegal reputation-based contracting can work in large markets when information flows cheaply.
#qualifies(0.75) — Lisa Bernestein, Opting out of the Legal System, 178