Preexisting social ties make intra-community monitoring cheaper than external oversight.
Evidence
Intrabourse reputation monitoring, induced by competition between bourses, is likely to be cheaper than increased monitoring by an umbrella organization such as the world federation. Within each bourse, there is a measure of social and ethnic homogeneity. Consequently, intrabourse monitoring can take advantage of preexisting social relationships and therefore be achieved at a lower cost than regulation by an outside body that cannot take advantage of these preexisting relationships. — Lisa Bernestein, Opting out of the Legal System, 207
Categorization
- XREF: Connects to the reader’s working premise: Coleman’s network closure — dense preexisting social ties enable low-cost norm enforcement, which is exactly the mechanism Bellodi confronts in reverse. — connects to: Insider reputation monitoring is cheaper than bank credit checking — Lisa Bernestein, Opting out of the Legal System, 119; Social homogeneity lowers the cost of private monitoring within trading groups.; Intermediaries reduce reputational information costs in extralegal markets. — Lisa Bernestein, Opting out of the Legal System, 133 (+4 more)
Broader Connections
- Social homogeneity lowers the cost of private monitoring within trading groups.
#corroborates(0.92) - Social relations maintained for other purposes serve as low-cost channels for acquiring scarce information.
#corroborates(0.88) — Coleman, SocialCapitalCreation-1988, 99 - Growing trade raised monitoring costs both within and across communities.
#qualifies(0.82) - Intermediaries reduce reputational information costs in extralegal markets.
#expands(0.78) — Lisa Bernestein, Opting out of the Legal System, 133 - Institutions emerge where information is costly, not where enforcement is absent.
#contradicts(0.72) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 177