{"id":4609,"date":"2012-06-20T12:00:38","date_gmt":"2012-06-20T16:00:38","guid":{"rendered":"http:\/\/www.Centives.net\/S\/?p=4609"},"modified":"2012-06-20T01:53:07","modified_gmt":"2012-06-20T05:53:07","slug":"why-laws-reduce-the-need-for-taking-hostages","status":"publish","type":"post","link":"http:\/\/www.Centives.net\/S\/2012\/why-laws-reduce-the-need-for-taking-hostages\/","title":{"rendered":"Why Laws Reduce The Need For Taking Hostages"},"content":{"rendered":"<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.Centives.net\/S\/wp-content\/uploads\/2012\/06\/060812_0609_WhyLawsRedu1.jpg\" alt=\"\" width=\"639\" height=\"426\" \/><\/p>\n<p>Robert Cooter wrote a book about the relationship between laws and economic development titled <a href=\"https:\/\/www.amazon.com\/dp\/0691147922\/ref=as_li_ss_til?tag=centives-20&amp;camp=0&amp;creative=0&amp;linkCode=as4&amp;creativeASIN=0691147922&amp;adid=1RS3WDGAYVBZE1T4VYFS&amp;\">Solomon&#8217;s Knot: How Law Can End the Poverty of Nations<\/a>. Some highlights of an excerpt posted online with his permission include:<\/p>\n<ul>\n<li>There is a double trust dilemma in innovation. The innovator must trust the financier not to steal the invention, and the financier must trust the innovator not to steal the money.<\/li>\n<li>In a way this dilemma has been around for centuries. In the fifth century two Kings exchanged their children as hostages to one another to ensure that they didn&#8217;t betray each other.<\/li>\n<li>Laws can play a role in helping to develop that trust between parties.<\/li>\n<li>Most economies start off with a relational basis of finance. You trust your family members and they trust you and so you can cooperate.<\/li>\n<li>However relational finance doesn&#8217;t scale for large scale businesses and across large economies.<\/li>\n<li>This is not to suggest that relationships become irrelevant. Indeed they have become more important than ever through the internet where online reviews of buyers and sellers play a crucial role.<\/li>\n<\/ul>\n<p>There are other interesting thoughts and reflections scattered throughout the chapter including our favourite:<\/p>\n<ul>\n<li>Economic and biological evolution differ in an important way. Economic evolution leads to individuals copying the original innovator \u2013 it &#8220;emulates the most fit through profit detection, whereas biological evolution eliminates the least fit through natural selection.&#8221;<\/li>\n<\/ul>\n<p>You can get the entire book <a href=\"https:\/\/www.amazon.com\/dp\/0691147922\/ref=as_li_ss_til?tag=centives-20&amp;camp=0&amp;creative=0&amp;linkCode=as4&amp;creativeASIN=0691147922&amp;adid=1RS3WDGAYVBZE1T4VYFS&amp;\">here<\/a>, and you can check out the <a href=\"http:\/\/american.com\/archive\/2012\/march\/want-to-end-poverty-legalize-freedom\/article_print\">entire excerpt<\/a> to find out more about the links between biology and economics, why establishing trust in modern business is like exchanging hostages, what China&#8217;s administrative structure shows us, the role that relationships play in diamond exchanges, and what the industrial revolution demonstrates to us about the evolution of finance.<\/p>\n<p>Source: <a href=\"http:\/\/american.com\/archive\/2012\/march\/want-to-end-poverty-legalize-freedom\/article_print\">The American<\/a><\/p>\n<p>Via: <a href=\"http:\/\/marginalrevolution.com\/marginalrevolution\/2012\/05\/solomons-knot-and-gray-markets.html\">Marginal Revolution<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Robert Cooter wrote a book about the relationship between laws and economic development titled Solomon&#8217;s Knot: How Law Can End the Poverty of Nations. Some highlights of an excerpt posted online with his permission include: There is a double trust dilemma in innovation. The innovator must trust the financier not to steal the invention, and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4608,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4609","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-bulletin"],"jetpack_featured_media_url":"http:\/\/www.Centives.net\/S\/wp-content\/uploads\/2012\/06\/060812_0609_WhyLawsRedu1.jpg","_links":{"self":[{"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/posts\/4609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/comments?post=4609"}],"version-history":[{"count":4,"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/posts\/4609\/revisions"}],"predecessor-version":[{"id":4919,"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/posts\/4609\/revisions\/4919"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/media\/4608"}],"wp:attachment":[{"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/media?parent=4609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/categories?post=4609"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.Centives.net\/S\/wp-json\/wp\/v2\/tags?post=4609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}