What Is the Benefit of Formal, Rule-Based, Impersonal Exchange with Third-Party

question 74

Essay

What is the benefit of formal, rule-based, impersonal exchange with third-party enforcement (often termed arm's-length transaction) versus informal institutions? Why can't we assume that formal institutions are inherently better than informal ones? How do formal and informal institutions complement each other?

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Definitions:

Innate

describes traits or qualities that are present from birth, not learned or acquired after birth.

Mondegreens

Mishearings or misinterpretations of phrases as a result of near-homophony, often resulting in a new meaning or humorous effect.

Poor Hearing

A condition characterized by a reduced ability to perceive sounds, potentially leading to difficulties in communication and social interaction.

Best Knowledge

The highest level of understanding or expertise that an individual or collective has on a particular subject at a given time.