Property rights, promise fulfillment, and authority
So today I just want to summarize where we are. Mostly.
I started by talking about how economists think about choice-- agents with an obective or objectives compare options from an opportunity set. I talked about property rights as an important part of that, and about how property rights are maintained by custom, by law, or by force.
More recently I've been talking about social exchange technologies, which of course depend on the society's property rights system. I've talked about markets, or marketness, in which spot exchanges are made by agents who-- the more markety the market-- don't need to know much or anything about each other.
I've been talking about contracts for future delivery and payment of goods or services, why contracts are emphatically not markets though some markets exist on which contracts are traded, and I mentioned that contracts entail further compliance problems beyond accepting property rights according to the relevant social system.
Contracts typically specify delivery dates, quantities, qualities, and a payment schedule. Any of these can be violated by parties to the contract, and the harder quality is to discern and the more conditions there are in the contract, the more subtle adjudicatung compliance becomes.
It is always in the short-run interests of parties to a contract to cheat on its terms. If they carry reputations that remain with them reneging too often will harm them, but they will leave a trail of collateral damage.
If there are too many renegers in an exchange area, fewer people will want to participate in a contract in that area. The thinner the number of participants, the harder it is to find a participation partner.
Regulators/adjudicators/enforcers can and should act even-handedly if they are to keep exchange opportunities open in an exchange category.
"Caveat emptor" should make potential buyers hesitate to participate. Assigning unlimited liability to producers will limit the desirability of producing and selling in the category.
It is a balance that the general public should think about any time regulation is considered.
Facebook posts incorporated:
Property rights, compliance and authority
I started by talking about how economists think about choice-- agents with an obective or objectives compare options from an opportunity set. I talked about property rights as an important part of that, and about how property rights are maintained by custom, by law, or by force.
More recently I've been talking about social exchange technologies, which of course depend on the society's property rights system. I've talked about markets, or marketness, in which spot exchanges are made by agents who-- the more markety the market-- don't need to know much or anything about each other.
I've been talking about contracts for future delivery and payment of goods or services, why contracts are emphatically not markets though some markets exist on which contracts are traded, and I mentioned that contracts entail further compliance problems beyond accepting property rights according to the relevant social system.
Contracts typically specify delivery dates, quantities, qualities, and a payment schedule. Any of these can be violated by parties to the contract, and the harder quality is to discern and the more conditions there are in the contract, the more subtle adjudicatung compliance becomes.
It is always in the short-run interests of parties to a contract to cheat on its terms. If they carry reputations that remain with them reneging too often will harm them, but they will leave a trail of collateral damage.
If there are too many renegers in an exchange area, fewer people will want to participate in a contract in that area. The thinner the number of participants, the harder it is to find a participation partner.
Regulators/adjudicators/enforcers can and should act even-handedly if they are to keep exchange opportunities open in an exchange category.
"Caveat emptor" should make potential buyers hesitate to participate. Assigning unlimited liability to producers will limit the desirability of producing and selling in the category.
It is a balance that the general public should think about any time regulation is considered.
Facebook posts incorporated:
Property rights, compliance and authority