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By all means, if you want to depend on social consequences to enforce business contracts, you are welcome to do so. Some people are able to operate that way in
by imgabe 11y ago
By all means, if you want to depend on social consequences to enforce business contracts, you are welcome to do so. Some people are able to operate that way in areas where there are limited players and everyone's reputation is well known or easily discoverable. Companies like Uber and AirBnB with reviews and ratings systems actually bring us much closer to this being a reality.
If social consequences were sufficient, we wouldn't have invented this whole legal system in the first place.
- TeMPOraL 11y agoRating system is actually the one thing that I think is good about Uber (though firing your emp^H^H^Hcontractor if he drops below 4.3/5 is not). Social consequences are not good for everything, but there are a lot of areas when there are better than economic approach. The problem is that economic incentives are much stronger than social, so the latter can be easily destroyed by the former. The classic example would be the fact that you absolutely, positively don't want to pay people for donating blood - it immediately leads to contamination of blood banks, as people replace the sense of duty with an opportunity for free cash, and thus stop caring about things like not donating blood when they are sick. Since social incentives are fragile, you want to defend them in the areas they work better than economic ones - hence the opposition to AirBnB.