Face-to-face repetition creates a moral economy enforcing cooperativeness on trading floors.

Evidence

Day after day, year after year, members of open-outcry exchanges trade with each other face-to-face. They have the incentive to monitor each other’s conduct and (because so much of this conduct occurs in a public arena) have the capacity to do so closely. Infractions are remembered, sometimes for decades. The result is a moral economy as well as a financial one: “This [Chicago] is a place where people think very simple in terms of people and markets. Black. White. Good. Bad. There’s an invisible sheet with an invisible line down the middle of it. This is a good guy. This is not a good guy. Nobody’s on that line. They’re either a good guy or a bad guy. Very long memories” (Power interview). Actions that are seen as unduly opportunistic are punished by “freezing out,” and actions that are perceived as in the common good are rewarded with “respect” (Melamed interview). — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 79

Categorization

• XREF: Echoes the diamond bourse reputation-and-freezing-out mechanisms from the reader’s extralegal-contracting materials. — connects to: Moral behavior shifts with the market supply and demand of cooperative partners — Nicolas Baumard, A mutualistic approach to morality: The…, 394; Repeated trade with a high discount factor enables cooperative equilibria. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 47; Frequent repeated interaction makes cooperative trade equilibria feasible, whereas infrequent trade does not. (+4 more)
• DEFINE: Introduces the ‘moral economy’ concept that anchors the chapter’s account of exchange social structure.

Related

• Repeated trade with a high discount factor enables cooperative equilibria. (similarity 0.80)
• People cooperate more when they expect repeated dealings or know a partner’s reputation (similarity 0.79)

Broader Connections

• Market making enforces a reciprocity norm that sustains the market itself #exemplifies (0.85) — Karin Knorr Cetina & Urs Bruegger, Global Microstructures, 87
• Frequent repeated interaction makes cooperative trade equilibria feasible, whereas infrequent trade does not. #expands (0.80)
• People cooperate more when they expect repeated dealings or know a partner’s reputation #complicates (0.80) — Norenzayan, Ara, Big gods - how religion transformed…, 34
• Repeated trade with a high discount factor enables cooperative equilibria. #expands (0.78) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 47
• Moral behavior shifts with the market supply and demand of cooperative partners #expands (0.75) — Nicolas Baumard, A mutualistic approach to morality, 394
• Economic transactions are embedded in complex moral relations, not just rational numbers #expands (0.72) — Nick Couldry & Ulises A. Mejias, The Costs of Connection, 1043