Another part of the inspiration for our formal model is the system of notaries that was widely used to register the existence of certain types of contracts and obligations. Typically, notaries were used for long-term contracts such as those for apprenticeships, sales of land, and partnerships (Lopez and Raymond, 1955). The extensive use of notaries in certain areas to register agreements suggests that reputation via word of mouth alone was insufficient to support honest behavior and that a third party without any binding authority to enforce obligations was nonetheless quite valuable for promoting honest exchange.

Builds on: "Group-wide reputation can enforce honest behavior among strangers."

PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE O…, loc. 38