Informal punishment fails because traders won’t boycott lucrative partners

Evidence

However, there is a second problem that the institutions must overcome: Traders may not find it in their individual interests to participate in punishing those who cheat. As one simple example, if trade is expected to be profitable, a trader will be reluctant to engage in a trade boycott. The institutions must be designed both to keep the traders adequately informed of their responsibilities and to motivate them to do their duties. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 77

Categorization

• XREF: Mirrors the Godfather’s world where private enforcers need incentives beyond mere information; also complements Milgrom et al.’s concern about who monitors the monitors. — connects to: Private trade-enforcement systems fail when wealth transfer is costly — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 118; Trade institutions must solve both an information and a punishment-motivation problem; Community ostracism alone may be insufficient to enforce trade judgments — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 37 (+2 more)

Broader Connections

• Community ostracism alone may be insufficient to enforce trade judgments #corroborates (0.90) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 37
• Boycotts discipline trade without requiring repeated personal dealings. #contradicts (0.85)
• Private trade-enforcement systems fail when wealth transfer is costly #qualifies (0.80) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 118
• Trade institutions must solve both an information and a punishment-motivation problem #expands (0.80)
• Community reputational enforcement works even without repeated bilateral interaction between traders. #contradicts (0.80) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 65