Trusting organizational law

Shawn Bayern

Regulation & Governance, 2025, vol. 19, issue 3, 831-843

Abstract: Decentralized governance technologies like blockchains are often proposed as substitutes for private legal arrangements like those provided by company law or organizational law more generally. In established legal systems in developed countries, the costs of implementing such algorithmic mechanisms are likely to be greater than the agency or other costs that come from selecting and trusting an existing third party. But even if that were not true, attempting to achieve decentralized governance solely by algorithm is more complicated than it appears and incurs significant “formalism costs.” Such costs can be reduced by the wealth of experience represented by the operational processes of organizational law. Mixing those operational processes with algorithmic governance by “opting into” organizational law, thereby letting it govern the interface between the algorithms and the real‐world legal rights associated with an organization, is likely to be a governance model superior to the use of algorithmic governance alone.

Date: 2025
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https://doi.org/10.1111/rego.12616

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Persistent link: https://EconPapers.repec.org/RePEc:wly:reggov:v:19:y:2025:i:3:p:831-843

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