Strong incentives make the legal-merchant strategy robust to any history

Evidence

Thus, regardless of the circumstances wrought by past play, there is no situation in which a one-time deviation from the Law Merchant System Strategy that is profitable for a trader provided that conditions (7)-(9) hold. — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 114

Categorization

• DEFINE: Clarifies the key robustness property of the model: because the conditions hold for any history of play, its enforcement strategy is a sequential equilibrium robust to past deviations.
• XREF: connects to: A Law Merchant institution can sustain honest trade as an equilibrium — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 95; Institutional and legal constraints give people strong external incentives to be trustworthy; Trust is encapsulated interest achievable through many incentive mechanisms (+1 more)

Related

• A Law Merchant institution can sustain honest trade as an equilibrium (similarity 0.79)

Broader Connections

• A Law Merchant institution can sustain honest trade as an equilibrium #expands (0.85) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 95
• Institutional and legal constraints give people strong external incentives to be trustworthy #corroborates (0.80)
• Trust is encapsulated interest achievable through many incentive mechanisms #corroborates (0.75)
• Trade institutions must solve both an information and a punishment-motivation problem #expands (0.72)