Linking institutions to economic performance: the role of macro-structures in micro-explanations

2012 ◽  
Vol 8 (3) ◽  
pp. 327-349 ◽  
Author(s):  
CYRIL HÉDOIN
Keyword(s):  
Game Theory ◽  
Economic Performance ◽  
Institutional Economics ◽  
Cultural Beliefs ◽  
New Institutional Economics ◽  
Individual Agency ◽  
Causal Mechanisms ◽  
Game Theoretic

Abstract:Economists have been investigating the link between institutions and economic performance for several years. While econometric studies of this link have flourished, they are of limited use in understanding the causal mechanisms making some institutions responsible for economic performance. Several works using game theory and akin to the ‘new institutional economics’ have entertained the goal of developing micro-explanations of the institutions–performance link. Because game theory focuses on individuals’ actions and beliefs, game-theoretic studies of institutions are thought to oppose more ‘structuralist’ explanations that downplay the role of individual agents and put more emphasis on the importance of social (or ‘macro’) structures. This paper demonstrates that this claim is misconceived, as the micro-explanations produced by game-theoretic models must assume already existing macro-structures. Institutions produce downward effects, shaping each agent's action. Moreover, in a game-theoretic framework, macro-structures are constitutive of individual agency since, without them, agents would often be unable to choose. I illustrate this claim with the example of Avner Greif's study of the role of cultural beliefs in the economic organisation of medieval societies.

scholarly journals Coevolving institutions and the paradox of informal constraints

2021 ◽  
pp. 1-20
Author(s):  
Daniel Seligson ◽  
Anne E. C. McCants
Keyword(s):  
Economic Growth ◽  
Game Theory ◽  
Dynamical Systems ◽  
Systems Theory ◽  
Institutional Economics ◽  
Dynamical Systems Theory ◽  
New Institutional Economics ◽  
Long Run

Abstract We can all agree that institutions matter, though as to which institutions matter most, and how much any of them matter, the matter is, paraphrasing Douglass North's words at the Nobel podium, unresolved after seven decades of immense effort. We suggest that the obstacle to progress is the paradigm of the New Institutional Economics itself. In this paper, we propose a new theory that is: grounded in institutions as coevolving sources of economic growth rather than as rules constraining growth; and deployed in dynamical systems theory rather than game theory. We show that with our approach some long-standing problems are resolved, in particular, the paradoxical and perplexingly pervasive influence of informal constraints on the long-run character of economies.

The philosophical interpretation of language game theory

2021 ◽  
Author(s):  
Nick Zangwill
Keyword(s):  
Game Theory ◽  
Evolutionary Game Theory ◽  
Evolutionary Game ◽  
Language Game ◽  
Linguistic Meaning ◽  
Theoretic Approach ◽  
Philosophical Interpretation ◽  
Game Theoretic ◽  
Game Theoretic Approach

Abstract I give an informal presentation of the evolutionary game theoretic approach to the conventions that constitute linguistic meaning. The aim is to give a philosophical interpretation of the project, which accounts for the role of game theoretic mathematics in explaining linguistic phenomena. I articulate the main virtue of this sort of account, which is its psychological economy, and I point to the casual mechanisms that are the ground of the application of evolutionary game theory to linguistic phenomena. Lastly, I consider the objection that the account cannot explain predication, logic, and compositionality.

Institutions

2019 ◽  
pp. 30-41
Author(s):  
Stefan Voigt
Keyword(s):  
Institutional Economics ◽  
Research Area ◽  
Economic Transformation ◽  
New Institutional Economics ◽  
Transformation Property ◽  
Special Focus ◽  
Political Transformation ◽  
Definition Of ◽  
Transformation Processes

This chapter offers a look at transformation processes from the perspective of the new institutional economics (NIE). It briefly describes the main pillars of this research area, including its assumptions, the definition of institutions, and their interplay. It is shown that the NIE can contribute to explaining the outcome of transformation processes by pointing at the different institutions relied upon during transition. In the section surveying the large literature on institutions and transition, special focus is laid on the role of constitutions for political transformation, property rights for economic transformation, and internal or informal institutions as institutions largely exempt from deliberate transformation which can, hence, constitute an important constraint in transformation processes. The chapter concludes by pointing out some research gaps.

Transformation of the State and Political Economy of the Governance

2020 ◽  
pp. 239-257
Author(s):  
Emek Yıldırım
Keyword(s):  
Political Economy ◽  
Public Administration ◽  
Institutional Economics ◽  
New Institutional Economics ◽  
The State ◽  
State Model ◽  
Functional Changes ◽  
The Public ◽  
Role Of The State

By the 1980s and 1990s, neoliberal policies such as privatizations and deregulations transforming the minimal state model to regulative state model from the Keynesian social welfare state system made some structural and functional changes in the state mechanism, and the public administration has been in the first place due to the changing relationship between the state and the market. In fact, within this context, the new institutional economics (NIE) had a remarkable influence upon the debates upon the altering role of the state. Hence, the transformation of the state in this regard also revealed the argumentations on the governance paradigm along with the doctrinaire contributions of the new institutional economics. Therefore, this chapter will discuss the transformation of the state and the political economy of the governance together with a critical assessment of the new institutional economics in the public administration.

Re-Thinking the Role of Institutions in Neoliberalism From New Institutional Economics Perspective

2020 ◽  
pp. 25-40
Author(s):  
Ilke Civelekoglu ◽  
Basak Ozoral
Keyword(s):  
Economic Growth ◽  
Political Economy ◽  
Developing Countries ◽  
Property Rights ◽  
Institutional Economics ◽  
New Institutional Economics ◽  
The Political ◽  
Formal Institutions ◽  
Fertile Ground

In an attempt to discuss neoliberalism with a reference to new institutional economics, this chapter problematizes the role of formal institutions in the neoliberal age by focusing on a specific type of formal institution, namely property rights in developing countries. New institutional economics (NIE) argues that secure property rights are important as they guarantee investments and thus, promote economic growth. This chapter discusses why the protection of property rights is weak and ineffective in certain developing countries despite their endorsement of neoliberalism by shedding light on the link between the institutional structure of the state and neoliberalism in the developing world. With the political economy perspective, the chapter aims to build a bridge between NIE and political economy, and thereby providing fertile ground for the advancement of NIE.

Ronald Coase's impact on economics

2014 ◽  
Vol 11 (2) ◽  
pp. 227-244 ◽  
Author(s):  
MARY M. SHIRLEY ◽  
NING WANG ◽  
CLAUDE MÉNARD
Keyword(s):  
Institutional Economics ◽  
Social Cost ◽  
Law And Economics ◽  
New Institutional Economics ◽  
Careful Study ◽  
Empirical Reality ◽  
Role Of Government ◽  
Institutional Issues ◽  
Rapid Transformation

AbstractRonald Coase had a profound impact on scholarship worldwide, and not for his ideas alone. Coase's ideas about transaction costs, the nature of the firm, the role of government, and the problem of social cost have been hugely influential. Throughout his long life, he also worked to change the conduct of economics, urging economists to ground their conclusions in careful study of empirical reality rather than theories that work only on the blackboard. Less well known, perhaps, is his work to nurture and shape the emerging fields of law and economics and new institutional economics, or his support to young scholars studying institutional issues around the world. In his final years, he was preoccupied by the rapid transformation of China and the institutional structure of production. This article summarizes Coase's significant intellectual contributions to economics, pointing out along the way some of the traits that made him such a powerful thinker and exceptionally influential scholar.

scholarly journals New Directions for Modelling Strategic Behavior: Game-Theoretic Models of Communication, Coordination, and Cooperation in Economic Relationships

2016 ◽  
Vol 30 (4) ◽  
pp. 131-150 ◽  
Author(s):  
Vincent P. Crawford
Keyword(s):  
Game Theory ◽  
Nash Equilibrium ◽  
Strategic Behavior ◽  
Economic Problem ◽  
Noncooperative Game ◽  
Economic Relationships ◽  
Future Developments ◽  
New Directions ◽  
Game Theoretic

In this paper, I discuss the state of progress in applications of game theory in economics and try to identify possible future developments that are likely to yield further progress. To keep the topic manageable, I focus on a canonical economic problem that is inherently game-theoretic, that of fostering efficient coordination and cooperation in relationships, with particular attention to the role of communication. I begin with an overview of noncooperative game theory's principal model of behavior, Nash equilibrium. I next discuss the alternative “thinking” and “learning” rationales for how real-world actors might reach equilibrium decisions. I then review how Nash equilibrium has been used to model coordination, communication, and cooperation in relationships, and discuss possible developments

scholarly journals Creating Values for Sustainability: Stakeholders Engagement, Incentive Alignment, and Value Currency

2012 ◽  
Vol 2012 ◽  
pp. 1-9 ◽  
Author(s):  
Frank T. Lorne ◽  
Petra Dilling
Keyword(s):  
Value Creation ◽  
Institutional Economics ◽  
Evaluation Method ◽  
Evolutionary Process ◽  
New Institutional Economics ◽  
Incentive Alignment ◽  
Economic Role ◽  
Shareholder Theory ◽  
The Difference

A shareholder theory of firm and a stakeholder theory of firm may differ in their respective evaluation method of firm performance. Both theories however recognize the importance of value creation as the economic role of firms as institutions. The New Institutional Economics (NIE) emphasizes incentives alignment, while also viewing stakeholder engagements as methods to expand the boundaries of firms. The difference in performance evaluation between the two approaches can be reduced if stakeholders, while formulating incentive alignment, also evaluate the mechanisms of establishing a common currency value. The concomitant development of stakeholder engagement, incentive alignment, and value currency creation is argued to be an evolutionary process with the efficiency implications of the two theories tending to converge.

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