Similar private diamond norms persist across countries with different legal systems, suggesting market efficiency.

Evidence

The customs and institutions in the diamond industry emerged for reasons wholly unrelated to shortcomings in the legal system; yet, even as the force of the old enforcement mechanisms of religion and secondary social bonds began to disintegrate, a network of trading clubs, designed to promote the dissemination of information about reputation and socialization among members, emerged to fill the gap. That generations of diamond dealers have clung to nearly identical intraindustry norms in countries with a wide variety of legal rules and institutions suggests that the traditional rules and institutions are likely to be efficient from the perspective of market insiders. — Lisa Bernestein, Opting out of the Legal System, 284

Categorization

• QUESTION: Worth probing: does norm convergence across legal regimes truly indicate efficiency, or could path dependence and closed-community transmission explain persistence equally well?
• XREF: connects to: The diamond trade sustains an extralegal contractual regime through private arbitration and reputational enforcement. — Lisa Bernestein, Opting out of the Legal System, 278; Diamond industry norms persist regardless of national legal systems. — Lisa Bernestein, Opting out of the Legal System, 284

Related

• Diamond industry norms persist regardless of national legal systems. (similarity 0.91)
• The diamond industry has rejected state law in favor of private governance. (similarity 0.82)
• The diamond trade sustains an extralegal contractual regime through private arbitration and reputational enforcement. (similarity 0.78)