Contract enforcement in a stateless economy

How are contracts enforced when the state cannot compel compliance? We study contract enforcement in a large illegal gambling market where legal recourse is unavailable and participation is largely anonymous. We observe more than 70 percent of gamblers repay their debts, indicating substantial baseline enforcement even in the absence of formal courts. We interpret this descriptive pattern as consistent with a broader set of informal enforcement forces, including repeated interaction, credit constraints, and reputational considerations. We then provide experimental evidence on one specific channel by experimentally varying reputational stakes and the time available to repay. Increasing reputational sanctions and extending the payment deadline raises repayment by a modest but significant amount, from roughly 70 percent to about 77 percent. These effects imply that reputational incentives can strengthen cooperation to a meaningful degree. Overall, our evidence suggests that impersonal markets can sustain substantial repayment without state enforcement, and that reputational sanctions further increase compliance.