Document Type

Article

Publication Date

2017

Keywords

trust-based exchange, diamond dealers, private ordering, coordinated punishments

Abstract

Both academic and popular representations of the diamond industry describe trust-based relations and an industry arbitration system that sustain trade. 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.

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Library of Congress Subject Headings

Commodity exchanges, Diamond industry and trade, Trust, Contracts

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