How would two competing private courts settle a dispute when each one rules in favor of its own customer?
I'm fairly new to anarcho-capitalism. I've read a couple of introductions and listened to some debates, and most of it makes sense to me. There's one part I keep getting stuck on, and I'd like to understand how people here think about it.
As I understand it, the idea is that people would subscribe to private defense agencies and courts instead of relying on a single state monopoly. The part I can't work out is what happens when my agency and yours disagree about a case.
Say I think you damaged my property, and you deny it. My agency rules for me and yours rules for you. What stops that from turning into a standoff between the two agencies?
The answers I've come across so far:
- Agencies would agree in advance on a third-party arbitrator, because fighting is more expensive than negotiating. This seems plausible, but it feels like it assumes everyone behaves reasonably.
- Reputation would punish agencies that refuse arbitration, since nobody would want to contract with them. I'm not sure how strongly that works in practice, especially if one agency is much bigger than the other.
- Something like the law merchant or medieval Icelandic law is a historical precedent. I've only read summaries of these, so I can't judge how well the comparison holds up.
My questions for people who know the theory better:
- Which of these answers do you find most convincing, and why?
- What's the strongest objection to your preferred answer, and how would you respond to it?
- Is there a good book, paper or article that covers this in depth? I'd like to read something rather than just argue from my own intuitions.
I'm asking in good faith. I'd like to understand the position properly before deciding what I think of it. Thanks to anyone who takes the time to answer.