Historical Property Rights, Sociality, and the Emergence of Impersonal Exchange in Long-Distance Trade

Abstract

Specialization and exchange are at the core of economics, yet over 230 years after Adam Smith first presented his fundamental theorem, economists know remarkably little about how exchange evolves from personal social interactions-reinforced by local knowledge, reputations, and the prospect of future dealings-to impersonal market transactions undergirded by such formal institutions as impartial courts. Smith, however, merely posited the phenomena of specialization and exchange as an expression of a "propensity in human nature … to truck, barter, and exchange one thing for another," effectively shifting the focus to wealth-creating specialization as a consequence of exchange. Ever since, save the important contributions of economic historians, the evolving process of exchange and specialization has been slighted. Laboratory experiments have mostly examined the efficiency properties of extant institutions or tested new institutions for field application; they have not inquired into the processes that account for the original emergence of market institutions.The general argument from economic history is that informal norms are adequate for smallscale exchange within villages and hunter-gatherer societies, but that as nascent specialization and exchange grow, expanding across a larger area, these informal norms are off-loaded onto more formal, centralized rule systems.Such institutions develop to mitigate the increases in transaction costs resulting from greater possibilities for conflict (Douglass C. North 990, 99;We should emphasize that some exchanges based on the reciprocity and sharing practices of local communities may tend to persist, and not be displaced, by formal centralized rule systems. Thus Robert C. Ellickson (99) provides a case study of the persistence of local norms that ignore codified law in dealing with animal trespass.

Promises and lies: can observers detect deception in written messages

“…A rapidly growing literature supports these observations. For example, Kimbrough et al (2006) found that it is more common to mention “we” or “us” during chat with in-group rather than out-group members, and that the mention of these encompassing words is positively correlated with cooperation and the willingness to make and keep promises to do personal favors. Schniter et al (2012) concluded from their experiments that one of the steps for effectively restoring damaged trust with a partner is to convey “a shared welfare or other-regarding perspective.”…”

The Cultural Transmission of Trust Norms: Evidence from a Lab in the Field on a Natural Experiment

“…Bisin and Verdier (2001), Tabellini (2008b), and Guiso et al (2008) focus primarily on the intra-family transmission process, while Dohman et al (2012) highlight the role of assortative mating and the local environment. Bisin and Verdier (2017), Kimbrough et al (2008), Greif and Tadelis (2010), and Iyigun and Rubin (2017) provide arguments for how culture and institutions interact. 4 While one can run a test for pre-existing differences on either side of the discontinuity (e.g., Becker et al 2016), such data from the pre-existing period are often much worse due to their historical nature and are subject to omitted variable bias.…”

Rebels Without a Clue? Experimental Evidence on Explicit Cartels

“…To shed more light on these strategies we infer the contents of representative chat protocols. In this regard we follow Kimbrough et al (2008) and Fonseca and Normann (2012) who have shown that quoting chat protocols of experiments may be very helpful for further revealing promising information about subjects' strategies.…”

“…8 The communication option also allows us to to understand the underlying motivations of colluding rms, i.e., whether rms may care about payo asymmetries between inside/outside rms in partial cartels. We therefore evaluate communication following the approaches used in Andersson and Wengström (2007) and Kimbrough et al (2008) in order to infer whether or not payo asymmetries inuence the formation of partial cartels.…”