An Autopsy of Cooperation: Diamond Dealers and the Limits of Trust-Based Exchange

54 Pages Posted: 21 Apr 2016 Last revised: 2 Aug 2016

Barak D. Richman

Duke University - School of Law

Date Written: April 13, 2016

Abstract

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

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

Barak D. Richman (Contact Author)

Duke University - School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7244 (Phone)
919-613-7231 (Fax)

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