Information about partners’ past behavior is essential for punishing cheaters.
Evidence
If traders do not query the LM, then they will have insufficient information to administer punishments, so once again Cheating will go unpunished. The LM institution encourages queries by making them a condition for appealing to the LM. and, as we have seen, querying deters Cheating. At equilibrium, traders who fail to query are constantly Cheated by their trading partners. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 120
Categorization
- XREF: Relates to the general economics-of-institutions literature on reputation and punishment as cooperation mechanisms (Greif, North, Milgrom’s own Law Merchant work). — connects to: Trustworthy behavior requires some information cost, but imperfect information can suffice. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 131
Related
- Trustworthy behavior requires some information cost, but imperfect information can suffice. (similarity 0.83)
- Trade institutions must solve both an information and a punishment-motivation problem (similarity 0.81)
- A private forum can incentivize information-gathering by tying appeals to prior queries. (similarity 0.80)
- Costly information, not infrequent trade, is the core obstacle to honest exchange. (similarity 0.80)
- Full-history information institutions are too costly for efficient trade (similarity 0.79)
- Institutions emerge where information is costly, not where enforcement is absent. (similarity 0.79)
- Pre-state commercial law judges made reputation systems work where direct knowledge failed (similarity 0.78)
- Costly information is what breaks informal trade enforcement. (similarity 0.78)
Broader Connections
- Trustworthy behavior requires some information cost, but imperfect information can suffice.
#qualifies(0.80) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 131