Extralegal reputation-based contracting can work in large markets when information flows cheaply.

Evidence

Charny has noted, however, that a reputation-bond-based, extralegal contractual regime will function even in large scale markets so long as “technology … such as computers used to monitor credit worthiness, or mass media used in advertising, [make it possible to] convey information cheaply to a large group of transactors … [that is] when a thick set of informational intermediaries” exists. — Lisa Bernestein, Opting out of the Legal System, 178

Categorization

• XREF: Connects to the reader’s Coleman network-closure framework: this is the information-flow condition that dense ethnic networks provide structurally. — connects to: Bourses move reputational information as efficiently as goods — Lisa Bernestein, Opting out of the Legal System, 49; Extralegal contracts need cheap formalities to signal agreements to the group. — Lisa Bernestein, Opting out of the Legal System, 134; Intermediaries reduce reputational information costs in extralegal markets. — Lisa Bernestein, Opting out of the Legal System, 133 (+8 more)

Related

• Intermediaries reduce reputational information costs in extralegal markets. (similarity 0.86)
• Extralegal contracts need cheap formalities to signal agreements to the group. (similarity 0.86)
• Reputation systems need cheap information flow, not frequent repeated trade, to enforce honesty. (similarity 0.84)
• Bourses move reputational information as efficiently as goods (similarity 0.84)
• Extralegal contracting needs reputational information plus cheap formalities to signal formation. (similarity 0.83)
• Cheap legal contracts still depend on extralegal reputation bonds (similarity 0.83)
• Private legal systems can rival state law when reputation functions as enforcement. (similarity 0.82)
• Reputation can substitute for legal enforceability in evaluating contracts. (similarity 0.79)
• Extralegal contracting costs fall when such contracts dominate a market. (similarity 0.79)

Broader Connections

• Reputation systems need cheap information flow, not frequent repeated trade, to enforce honesty. #expands (0.85) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 13
• Bilateral reputation systems fail because information and sanctioning are costly public goods #contradicts (0.82) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 78
• Reputation can substitute for legal enforceability in evaluating contracts. #corroborates (0.80) — Lisa Bernestein, Opting out of the Legal System, 213
• Extralegal contracting needs reputational information plus cheap formalities to signal formation. #qualifies (0.78)
• Centralized adjudicators solve trade by combining information storage with dispute resolution #qualifies (0.78) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 79
• Extralegal contracting costs fall when such contracts dominate a market. #expands (0.75) — Lisa Bernestein, Opting out of the Legal System, 132