54 Pages Posted: 21 Apr 2016 Last revised: 2 Aug 2016
Date Written: April 13, 2016
Both academic and popular representations of the diamond industry describe trust-based relations that sustain trade and support the industry’s private arbitration system. In recent years, however, trust among merchants has eroded, and merchants have correspondingly lost confidence in the industry’s arbitration. This article describes the events that have led to the breakdown of cooperative trust in the industry and derives lessons regarding the nature and limits of reputation-based exchange in the modern economy.
Keywords: trust-based exchange, diamond dealers, private ordering, coordinated punishments
JEL Classification: L14, K4, D23
Suggested Citation: Suggested Citation
Richman, Barak D., An Autopsy of Cooperation: Diamond Dealers and the Limits of Trust-Based Exchange (April 13, 2016). Available at SSRN: https://ssrn.com/abstract=2764470