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I'm not saying that this is anything close to optimal, but it should be noted that under this system (which is reminiscent of the way ancient Chinese criminal law worked, per Legal Systems Very Different from Ours[0]) people who get beat up should still report and take the punishment. Sure, you'll get punished for it once but you'll also build a solid reputation for not letting things slide, so it's highly unlikely that anyone will want to beat you up again.
[0] Except that the punishment back then for being involved in a crime (generally a theft or a swindle of some sort) was, guess what-- you got beat up.