Without legal enforcement or reputation audiences, some bargains become impossible

Evidence

This need for promises is more than incidental; it has an institutional importance of its own. It is not always easy to make a convincing, self-binding, promise. Both the kidnapper who would like to release his prisoner, and the prisoner, may search desperately for a way to commit the latter against informing on his captor, without finding one. … If the law will not enforce price agreements; or if the union is unable to obligate itself to a no-strike pledge; or if a contractor has no assets to pay damages if he loses a suit, and the law will not imprison debtors; or if there is no “audience” to which one can pledge his reputation; it may not be possible to strike a bargain, or at least the same bargain that would otherwise be struck. — Thomas C. Schelling, The Strategy of Conflict, 115

Categorization

• XREF: Directly establishes the gap the Mafia fills: when legal commitment mechanisms fail, a third-party enforcer with an audience of reputation can bind the bargain. This is the crux of the reader’s analytical project. — connects to: Reputation alone cannot sustain honest trading without third-party registration.; Public pledges of reputation can make concessions impossible — Thomas C. Schelling, The Strategy of Conflict, 81; Reputational incentives in markets generate quality that centralized quotas could not reward. (+10 more)
• DEEPTHINKING: The kidnapping self-commitment case is the sharpest statement in economics of why trust institutions cannot be improvised on demand — worth sitting with as the theoretical core of private enforcement.

Related

• Enforcing one’s own promises requires a supporting legal or information structure (similarity 0.82)
• Reputation alone cannot sustain honest trading without third-party registration. (similarity 0.82)
• Extralegal contracting needs reputational information plus cheap formalities to signal formation. (similarity 0.80)
• Public pledges of reputation can make concessions impossible (similarity 0.79)
• Agreements stay enforceable through the shadow of future bargains (similarity 0.79)

Broader Connections

• Reputational incentives in markets generate quality that centralized quotas could not reward. #corroborates (0.85)
• Inability to make enforceable promises can shield someone from extortion #contradicts (0.85) — Thomas C. Schelling, The Strategy of Conflict, 722
• Institutional and legal constraints give people strong external incentives to be trustworthy #corroborates (0.85)
• Public humiliation substitutes for weak legal enforcement of debts #exemplifies (0.82)
• Mutual distrust in a transaction generates demand for a third-party guarantor #expands (0.80) — Diego Gambetta, The Sicilian Mafia The Business of…, 35