In section 3, we introduce our basic model of a system of private enforcement and develop our core thesis that the role of the judges in the system, far from being substitutes for the reputation mechanism, is to make the reputation system more effective as a means of promoting honest trade. The formal system is more complex than the simple informal system of reputations that preceded it, but that was a natural outcome of the growing extent of trade.

XREF: Connects to literature on private enforcement and informal reputation markets in institutional economics, e.g., Milgrom, North, and Weingast.

PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE O…, loc. 14