Rings and Promises

19 June 2006 at 3:44 pm 3 comments

| Peter Klein |

Brayden King caught my eye today with a post titled "Is Power Sexy?" He's referring to a 2005 American Journal of Sociology paper with the same title. Of course, contemporary academic prose can make even sex and power seem dull — Using a set of network data from a large number of naturally occurring groups, this study seeks to determine whether powerful people are more likely to be seen as sexy by others than are persons without power [, and] disentangles two aspects of power that are often confused, namely power as a dyadic relationship and power as an individual characteristic or position (which the author calls "status") — but I believe Brayden when he says it's a fun paper to read and blog about.

This made me think, what are some papers in organizational economics that are fun to read? One is Margaret Brinig's "Rings and Promises" (1990), which applies Williamson's hostage model to diamond engagement rings. Prior to Word War II, Brinig tells us, diamond engagement rings were uncommon, even among couples who could afford them. In those days, a woman whose fiancee had broken off an engagement could sue for monetary damages, under a "Breach of Promise to Marry" action, to compensate for loss of reputation. In the 1940s states began to take these laws off the books, and the custom of the man giving the woman a diamond engagement ring evolved as a response. In the US, a woman who breaks off an engagement is expected to return the ring, but if the man breaks it off she gets to keep the ring. The ring thus serves as a kind of bond: the woman keeps the man's ring "hostage" until he follows through with marriage. In the language of transaction cost economics, the ring facilitates a "credible commitment." The custom can thus be seen as a sort of market response to a change in the legal environment.

I've been using this article in class for years and students always enjoy it. (I have not, however, had the courage to use Mark Ramseyer's 1991 paper on a similar subject, "Indentured Prostitution in Imperial Japan: Credible Commitments in the Commercial Sex Industry.")

Entry filed under: - Klein -, Recommended Reading, Theory of the Firm.

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3 Comments Add your own

  • 1. brayden  |  19 June 2006 at 4:53 pm

    Fun, of course, is all relative. What we as academics think is fun is likely to bore the pants off our friends and neighbors.

  • 2. simon  |  19 June 2006 at 7:58 pm

    I would suggest that you read a Marketing view of Diamond ring giving. Marketers would argue that the custom arose from DeBeers excellent creation of symbolic gift via Advertsing. The appeal of this hypothesized logic is that it appears to be working in most of the markets/nations where it has been introduced. It is not dependent upon the change in legal status. It is however, aligned with an institutional perspection (North).

  • 3. Peter Klein  |  22 June 2006 at 3:58 pm

    I have also heard the marketing view expressed by Simon. Simon, can you suggest any literature on this?

    Also, regarding fun readings: Timothy Taylor (Winter 2006 Journal of Economic Perspectives) suggests The Joy of Economics: Making Sense out of Life, a web-based textbook by Winthrop University professor Robert J. Stonebraker.

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