The extent to which property rights are upheld by court enforcement is often used as an indicator for economic prosperity . This makes excellent sense, as it is hard to imagine a large division of labor wherein violations of property rights are rampant. However, this fallacious thinking ignores other methods of securing property rights. Said rights are not maintained by courts alone; as economic theory and history tell us, there is another important factor in securing safe transactions: signaling.
Signaling is when one party performs an action that is costly if they were to renege on the terms of an […]
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