kaal:claim:3782193-030

The strong trust that sustained Maghribi trade, in which embezzlement was rare despite extreme information asymmetry, cannot be explained by a strong centralized government, since the Maghribis could not form a centralized legal or political hierarchy and the official legal channels were slow and unreliable.

In point of fact, the records show that such embezzlement was rare. Instead, a strong sense of trust pervaded. So what mechanism protected the principals from their agents' asymmetric information? The answer was not a strong centralized gov- ernment.

Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021), Maghribi traders’ solution, p. 24
https://ssrn.com/abstract=3782193 · source PDF

Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193

• Maghribi Jewish traders around 1000 AD under the Fatimid caliphate

empiricalsupport: evidencedai-and-agentscorporate-governancedisclosurereputationlaw-and-legal-systemscompliance

• extended_by kaal:claim:3782210-040 The Maghribi traders show that reputation alone can sustain a decentralized network under extreme information ...

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