For example, merchants engaged in long-distance trade could not be expected to know, of their own knowledge, whether another pair of merchants had honored their mutual obligations. Unless social and economic institutions developed to fill in the knowledge gap or unless other means of enforcement were established, honest behavior in a community of self-interested traders could not be maintained.

DEFINE: Defines the knowledge gap problem: distant traders cannot directly verify others' conduct, necessitating institutional substitutes. Builds on: "Trade expansion demanded new institutions to deter merchant cheating."

PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE O…, loc. 66