Vincy Fon, Francesco Parisi
Date Posted: 2002
Notable scholars have considered the conditions under which rules of customary law can emerge spontaneously through the voluntary interaction and exchange of individual members of a group. In this paper, we model the process of customary law formation under different regimes. We start by considering a traditional model of customary law where legal rules emerge out of past practice. Once established by practice, legal customs enjoy reciprocal application among the parties. Our model reveals the limits of the process of custom formation when choices are sequential and players know their roles at the time of strategy selection. After studying the effect of reciprocity, we examine the effects of "articulation" theories, which allow the players to select a strategy before their respective roles are unveiled. The welfare analysis of the alternative mechanisms of custom formation reveals the advantages and limits of the various processes of customary law formation.