The thin boundary between custom and law – a law and economics approach

There is a field of research dedicated to social order emerging without the apparatus typical of present-day nation states. In fact, there is more than one field of this type, or at least this field has been explored from multiple angles across various academic disciplines. Perhaps for this reason, the boundaries of the field can sometimes be blurred. Therefore, the first part of this thesis outlines the basic building blocks of the field of “spontaneous” social orders. The result is a classification of institutions studied within this field into several ideal types, which are similar in some respects and different in others. The second, longer part of the thesis takes a deeper dive into a specific area of the field in question, examining the different outcomes of two rule-making regimes: custom and design. The focus is on institutions with decentralized, or collective, enforcement, which aligns closely with the realities of societies governed by “early” or “primitive” law, as well as the structural anarchy of the international scene. The novelty of this part lies primarily in incorporating incomplete information into the analysis. It begins with a basic observation: institutions are public knowledge, but also start with much of the relevant information being private knowledge of the parties involved. Against this backdrop of incomplete information, the second part of the thesis analyzes, on the one hand, customary rules – those that emerge from the interactions of agents – and, on the other hand, “designed” rules. The thesis suggests that different methods of institution-making result in varying degrees of specificity, susceptibility to manipulation, and flexibility or adaptability to the broader environment. These conclusions are illustrated with examples from legal anthropology, legal history, and international law.