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This paper investigates the possibility of anarchy achieving a high trade equilibrium via the example of ninja communities in Japan. Initially, ninjas in the mountainous regions of Iga and Kōka were stateless, constantly feuded, and had few opportunities for exchange. With the advent of civil war in the sixteenth century, ninjas’ economic conditions changed. The mercenary market significantly expanded and presented great profit opportunities for the ninjas. However, instead of creating a formal government to move to a higher trade equilibrium, the ninjas resorted to forming voluntary confederations held together by private constitutions. I argue that this development was possible because the institutional environment of the Sengoku period enabled a framework of self-governing institutions and principles. The ninjas were able to build on this framework with very low organizational costs. As a result, the ninjas were able to reap large economic gains on the mercenary market while remaining stateless—a seemingly paradoxical development that goes against the standard dichotomy of “states and thick markets” versus “anarchy and thin markets.”

The paper analyses the economics behind the ordeal by sacramental bread — a method of criminal dispute resolution in the Russian Princedoms period. Contributing to the framework advanced by Leeson (2011, 2012a, 2012b) [Trial by battle. Journal of Legal Analysis, 3(1), 341–375; An Austrian approach to law and economics, with special reference to superstition. The Review of Austrian Economics, 25(3), 185–198; Ordeals. The Journal of Law and Economics, 55(3), 691–714], this paper advances a hypothesis that the ordeal could have been designed as a ‘pressure valve’ to reduce scepticism in relation to other ordeals. To prove this, a model is constructed showing that when high scepticism causes fixed-outcome ordeals to become costly, the clergy could resort to creating an ordeal, the verdicts of which would not be argued against through a careful manipulation of its costs and benefits. In this ordeal, guilt was determined by the proband’s inability to swallow the bread due to stress and thus relied on a biological reaction instead of a predetermined outcome. Investigations showed that even if the ordeal delivered false verdicts, appealing the verdict was not beneficial to the proband. This was achieved by only employing the ordeal in resolution of petty theft, which made the potential losses from a false verdict very minimal. Further, the ordeal was staged as a confession, which reduced the possibility of a proband facing social ostracism.

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