THE ROLE OF INSTITUTIONS IN THE REVIVAL OF TRADE: THE LAW MERCHANT, PRIVATE JUDGES, AND THE CHAMPAGNE FAIRS
Abstract
A good reputation can be an effective bond for honest behavior in a community of traders if members of the community know how others have behaved in the past – even if any particular pair of traders meets only infrequently. In a large community, it would be impossibly costly for traders to be perfectly informed about each other's behavior, but there exist institutions that can restore the effectiveness of a reputation system using much less extensive information. The system of judges used to enforce commercial law before the rise of the state was such an institution, and it successfully encouraged merchants (1) to behave honestly, (2) to impose sanctions on violators, (3) to become adequately informed about how others had behaved, (4) to provide evidence against violators of the code, and (5) to pay any judgments assessed against them, even though each of these behaviors might be personally costly.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
The successful operation of medieval European trade fairs rested on governance and reputation mechanisms that gave people faith to trade with strangers.
“And what's more, the successful operation of these trade fairs, where people were expected to trade with counterparts whom they had never met, rested on governance and reputation mechanisms that gave people the faith to trade with strangers (see Milgrom et al. 1990).”
From Reputation and Feedback Systems in Online Platform Markets (2016) · cites this paper as Milgrom et al. 1990
Cited by
Sorted by citations
Comparative Economic Organization: The Analysis of Discrete Structural Alternatives
Williamson, O. E. (1991) · Administrative Science Quarterly · doi:10.2307/2393356 · Cited by 7,151 · see citing works
Collective action and the evolution of social norms.
Ostrom, E. (2000) · Journal of Economic Perspectives · doi:10.1257/jep.14.3.137 · Cited by 4,195 · see citing works
Evolution of indirect reciprocity
Nowak, M. A., & Sigmund, K. (2005) · Nature · doi:10.1038/nature04131 · Cited by 2,762 · see citing works
Toward a new economics of science
Partha, D., & David, P. A. (1994) · Research Policy · doi:10.1016/0048-7333(94)01002-1 · Cited by 2,448 · see citing works
Crawford, S. E. S., & Ostrom, E. (1995) · American Political Science Review · doi:10.2307/2082975 · Cited by 1,362 · see citing works
Pavlou, P. A., & Dimoka, A. (2006) · Information Systems Research · doi:10.1287/isre.1060.0106 · Cited by 930 · see citing works
Evolution of the Social Contract
Skyrms, B. (2014) · doi:10.1017/cbo9781139924825 · Cited by 743 · see citing works
Reputation and Feedback Systems in Online Platform Markets
Tadelis, S. (2016) · Annual Review of Economics · doi:10.1146/annurev-economics-080315-015325 · Cited by 524 · see citing works
More order with less law: On contract enforcement, trust and crowding
Bohnet, I., Frey, B. S., & Huck, S. (2001) · American Political Science Review · doi:10.1017/s0003055401000211 · Cited by 391 · see citing works
Cooperation among strangers with limited information about reputation
Bolton, G. E., Katok, E., & Ockenfels, A. (2005) · Journal of Public Economics · doi:10.1016/j.jpubeco.2004.03.008 · Cited by 305 · see citing works
Grayson, K., Johnson, D., & Chen, D.-F. R. (2008) · Journal of Marketing Research · doi:10.1509/jmkr.45.2.241 · Cited by 234 · see citing works
Networks of reliable reputations and cooperation: a review
Takács, K., Gross, J., Testori, M., Letina, S., Kenny, A. R., Power, E. A., & Wittek, R. P. M. (2021) · Philosophical Transactions of the Royal Society B · doi:10.1098/rstb.2020.0297 · Cited by 61 · see citing works
Formal and Informal Contracting: Theory and Evidence
Gil, R., & Zanarone, G. (2017) · Annual Review of Law and Social Science · doi:10.1146/annurev-lawsocsci-110316-113413 · Cited by 56 · see citing works
Klein, T. J., Lambertz, C., Spagnolo, G., & Stahl, K. O. (2009) · International Journal of Electronic Business · doi:10.1504/ijeb.2009.026532 · Cited by 40 · see citing works
Bridging the Trust Gap in Electronic Markets: A Strategic Framework for Empirical Study
Bolton, G. E., Katok, E., & Ockenfels, A. (2005) · Applied Optimization · doi:10.1007/0-387-23392-x_7 · Cited by 11 · see citing works
- Authors
- Milgrom, P. R., North, D. C., & Weingast*, B. R.
- Affiliations
- Stanford University (US)
- Washington University in St. Louis (US)
- ORCID
- Milgrom, Paul R.
- Venue
- Economics & Politics
- Publisher
- Wiley
- Published
- 1990-03
- Volume
- 2
- Issue
- 1
- Pages
- 1-23
- ISSN
- 0954-1985 (ISSN-L)
- 1468-0343
- OpenAlex
- W2074449447
- Cited by
- 1,793
- References
- 0
- Citations by year
- 2026: 46 · 2025: 84 · 2024: 43 · 2023: 48 · 2022: 51 · 2021: 61 · 2020: 90 · 2019: 61 · 2018: 49 · 2017: 59 · 2016: 62 · 2015: 58 · 2014: 58 · 2013: 51 · 2012: 47
- FWCI
- 29.03
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Economics and Politics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Law, Economics, and Judicial Systems
- Social Sciences › Political Science and International Relations › Historical Economic and Legal Thought
- Social Sciences › Political Science and International Relations › Medieval and Early Modern Justice
- Keywords
- lex mercatoria, Champagne fairs, merchant trade, reputation systems, sanctions, trade history
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
