Legal Rules and Social Norms in Japan's Secret World of Sumo

Members of the Japan Sumo Association, the organization that governs professional sumo wrestling, have developed a complex web of formal legal rules and informal social norms outside of the usual confines of the law to structure and define thier relationships. The core of this organizational structure is the rules and norms that govern the ownership and transfer of 105 shares of so-called elder stock. The elder-share-based organizational structure maximizes group welfare in two ways. First, the constitutive rules and norms that make up the elder share regime tend to maximize the aggregate welfare of the group. Second, within the elder share regime, the Sumo Association's choice of whether to apply rules or to defect to norms is based on a calculation of comparative efficiency. Copyright 1997 by the University of Chicago.