Suppose there was a butcher known to be a psychopath who people would really rather not buy from. Given the relatively low barrier to entry of being an 18th-century butcher (relative to many of our large industries today), someone could enter the market and just not be a psychopath and take all that guy's business because people would prefer shopping there.
Knowing this, then from a purely game-theoretical perspective, the psychopathic butcher would realize that if he wanted to be competitive in his village, he should probably dial the psychopathy back. An alternative would be to outright attack competition, but before the industrial revolution he probably wouldn't have enough of a leg up on challengers to afford that.
Arguably that has changed since, where incumbents benefiting from economies of scale have much greater advantage over new competitors and therefore have less to fear from bad behavior (see basically the history of labor post-industrial revolution). Incumbents do still get disrupted, but for some reason virtually never on ethical differentiation.
Source: live in Yorkshire.
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