punishable; this makes the equilibrium sub-game perfect. Understanding the merchants' incentives to create an institution to support decentralized contract enforcement like this helps to overcome the tendency in the law and economics and positive political theory literatures to assume that the role of law is exclusively attributable to the capacity to take advantage of centralized enforcement mechanisms such as state courts and police power. In a further contribution in this area, Milgrom, together with Barry Weingast and Avner Greif, applied a repeated game model to explain the role of merchant guilds in the medieval period (Greif, Milgrom and Weingast, 1994). The paper beings with the observation that long-distance trade in the somewhat chaotic environment of the Middle Ages exposed traveling merchants to the risk of attack, confiscation of goods and unenforced agreements. Merchants thus required the assistance of local rulers for protection of person, property and contract. But what reason did rulers have to provide this assistance? A key insight from the paper is that neither bilateral nor multilateral reputation mechanisms can support the incentives of a ruler to protect foreign merchants as trade reaches an efficient level. The reason is that at the efficient level the marginal value of losing the trade of a single or even a subset of merchants—in their attempt to punish a defaulting ruler—approaches zero. The threat is, thus, insufficient to deter a ruler from confiscating goods or to encourage their expenditure of resources or political capital to defend foreign merchants against local citizens. Effective punishment that will deter rulers' bad behavior requires more extensive coordination of effectively all the merchants who provide value for the ruler. The question then becomes, what incentives do the merchants have to participate in the collective boycott? Here is the role for the Merchant Guild, an organization that has the power to punish its own members for failure to abide by a boycott announced by the guild. These insights have been built on to explore more generally the role of legal institutions in coordinating and incentivizing decentralized enforcement mechanisms like the multilateral reputation system. Milgrom's contribution to the understanding of legal institutions also includes one of the early express analyses of the functioning of adjudicatory institutions. In Milgrom and Roberts (1986b) the authors explore the role of strategic revelation in an adjudicatory setting. They show that the core notion that adversarial litigation will lead to the truth is true