Minimal Institutions: Game Theory and Gaming

2016 ◽  
Author(s):  
Martin Shubik ◽  
Eric Smith
Keyword(s):  
Game Theory ◽  
General Equilibrium ◽  
Institutional Economics ◽  
Price System ◽  
Process Models ◽  
Price Formation ◽  
Equilibrium System

The General Equilibrium system provides a pre-institutional modeling structure appropriate to studying many allocative properties of the price system. The economies we live in ere encompassed by their polities and societies. The task laid out here is to indicate how to build process models of the economy that are consistent with the General Equilibrium system, but build out in a systematic manner towards the multitude of institutions that are the carriers of process in an ongoing society. It is argued here that this can be done in such a manner that there is a natural cascade of process models consistent with General Equilibrium: but these become progressively more complex as new functions are required to support the dynamics of the society. The first step into a mathematical institutional economics involves the invention of markets and money and the endogenization of price formation.

scholarly journals Accounting and its Relationship to General Equilibrium Theory

2019 ◽  
Vol 9 (3) ◽  
Author(s):  
Martin Shubik
Keyword(s):  
Economic Theory ◽  
General Equilibrium ◽  
Price System ◽  
Equilibrium Theory ◽  
Price Formation ◽  
Microeconomic Theory ◽  
General Equilibrium Theory

Abstract Accounting both for macro and microeconomic purposes deals with process and dynamics. Much of the best microeconomic theory has dealt only with statics. General equilibrium theory shows the virtues of a price system, but abstracts from price formation and all of the accounting problems which appear in disequilibrium. An approach is suggested here for reconciliation of accounting with general equilibrium. More generally, it is suggested that the importance of accounting to economic theory has been underestimated.

What Did The Study of The Soviet Economy Contribute to Mainstream Economics?

2010 ◽  
pp. 39-55
Author(s):  
M. Ellman
Keyword(s):  
Economic Growth ◽  
Property Rights ◽  
General Equilibrium ◽  
Informal Sector ◽  
Institutional Economics ◽  
Soviet Economy ◽  
General Equilibrium Theory ◽  
Mainstream Economics ◽  
Universal Applicability ◽  
Soviet Experience

This article is an overview of the contribution made by economic Sovietology to mainstream economics. The long debate about the universal applicability of mainstream economics is reconsidered in the light of the Soviet experience. Information is provided on the contribution of the study of the Soviet economy to fields as diverse as the measurement of economic growth, institutional economics, economic administration, the economics of property rights, the economics of the informal sector, the economics of famines, the Austrian critique of general equilibrium theory, and incentives.

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.

Equilibrium with Constant Returns

2011 ◽  
Author(s):  
Yves Balasko
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
Convex Cone ◽  
Supply And Demand ◽  
Returns To Scale ◽  
Price System ◽  
Production Sector ◽  
The One ◽  
Constant Returns To Scale ◽  
Privately Owned

This chapter analyzes an equilibrium model where privately owned firms feature either smooth decreasing or constant returns to scale. Profit of the constant returns to scale firms being equal to zero at equilibrium, the equilibrium of the model does not depend on the ownership structure of these firms. In addition, the convex conical production sets of these firms sum up into a convex cone. It is as if the production sector operating under constant returns consists of a unique firm. The general equilibrium model with decreasing and constant returns to scale firms is essentially the same model as the one considered in Chapter 10 with the addition of a unique firm operating under constant returns to scale. Nevertheless, this addition is enough to hamstring the approach of the preceding chapters based on the concept of price system that equates aggregate supply and demand. The solution is to add to that price system the activity of the constant returns to scale firm.

The Oxford Handbook of Philosophy of Economics

2009 ◽  
Keyword(s):  
Data Mining ◽  
Game Theory ◽  
General Equilibrium ◽  
Behavioral Economics ◽  
Experimental Economics ◽  
Well Being ◽  
Computational Economics ◽  
Growth Theory ◽  
General Equilibrium Theory ◽  
Philosophy Of Economics

The Oxford Handbook of Philosophy of Economics is a reference work on philosophical issues in the practice of economics. It is motivated by the view that there is more to economics than general equilibrium theory, and that the philosophy of economics should reflect the diversity of activities and topics that currently occupy economists. Contributions in the book are thus closely tied to on-going theoretical and empirical concerns in economics. Contributors include both philosophers of science and economists. Articles fall into three general categories: received views in philosophy of economics, on-going controversies in microeconomics, and issues in modeling, macroeconomics, and development. Specific topics include methodology, game theory, experimental economics, behavioral economics, neuroeconomics, computational economics, data mining, interpersonal comparisons of utility, measurement of welfare and well-being, growth theory and development, and microfoundations of macroeconomics.

Mathematical Institutional Economics and the Theory of Money and Financial Institutions

2016 ◽  
Author(s):  
Martin Shubik ◽  
Eric Smith
Keyword(s):  
Financial Institutions ◽  
Rational Expectations ◽  
Institutional Economics ◽  
Random Variable ◽  
Process Models ◽  
Modeling Methodology ◽  
Theory To Practice ◽  
The One ◽  
Simultaneous Move

Chapter 11 raises the question of what is meant by our usage of “theory”. Different disciplines utilize the word theory differently. Furthermore model and theory appear on occasion to be used interchangeably. Aristotle contrasted theory to practice. Praxis is the Greek term for doing. Mathematical theory is deductive. The sensory or empirical content is implicit in the axioms. The logical consequences of the axioms provide theorems. A semantic view stresses the connection between the axioms and the abstraction of some aspect of reality. We stress that the natural preliminary step before dynamics is to construct process models based on general equilibrium. This can be done utilizing single simultaneous move games. This is sufficient to show the critical roles of money and financial institutions without even having to discuss complication in information and behaviour. The evolution of money and many financial institutions does not even call for the presence of exogenous uncertainty. A single random variable is sufficient to illustrate innovation. We develop a general modeling methodology leading to the construction of models as playable games. Staying with the one move structure leads to describing a manageable number of minimal institutions (below 100). When we consider more moves and information the number of logically feasible and plausible institutions becomes hyperastronomical and we are forced into considering not merely structure but many variants of behaviour even within the simple scope of rational expectations. This problem is taken up in Chapter 12.

The Economy: Time, Size, and Complexity

2016 ◽  
Author(s):  
Martin Shubik ◽  
Eric Smith
Keyword(s):  
Control System ◽  
General Equilibrium ◽  
Exchange Economy ◽  
Price System ◽  
Shadow Prices ◽  
Financial Instruments ◽  
Static Theory ◽  
Informal Control ◽  
The Government ◽  
Formal Rules

The first five chapters have been devoted to reformulating a pre-institutional static theory of general equilibrium, into considering an economy in terms of process where markets and other institutions exist embedded within and interacting on different timescales with the polity and society. This embedding of the economy within the framework of government and society provides both a natural formal and informal control system. The government provides the formal rules with the laws and their enforcement and the society and polity on different timescales provide the pressure on the government for rule formation and the direct pressures on the economy to conform to custom as well as law. The price system where it exists provides a perception device where the pressures of disequilibrium are signalled by the shadow prices that develop both on the price of commodities and on loans and other financial instruments. We deal here with the production and exchange economy in a process setting.

Institutional economics of Russia (On the book by R. M. Nureev and Yu. V. Latov “Economic history of Russia: An essay in institutional analysis”)

2017 ◽  
pp. 136-147
Author(s):  
A. Zaostrovtsev
Keyword(s):  
Game Theory ◽  
Economic History ◽  
Predictive Power ◽  
Institutional Economics ◽  
Institutional Analysis ◽  
History Of ◽  
Game Theoretic

Game theory has been a huge success in economics. Many important questions have been answered, and game theoretic methods are now central to much economic investigation. We suggest areas where further advances are important, and argue that models of learning are a promising route for improving and widening game theory’s predictive power while preserving the successes of game theory where it already works well. We emphasize in particular the need for better understanding of the speed with which learning takes place.

Challenges and growth: the development of the interdisciplinary field of institutional analysis

2007 ◽  
Vol 3 (3) ◽  
pp. 239-264 ◽  
Author(s):  
ELINOR OSTROM
Keyword(s):  
Game Theory ◽  
Institutional Economics ◽  
Institutional Analysis ◽  
New Institutional Economics ◽  
Behavioral Game Theory ◽  
Interdisciplinary Field ◽  
Behavioral Game ◽  
The Commons ◽  
Public Economies ◽  
The Individual

Abstract:This article briefly describes some of the intellectual challenges during the last half-century to the traditional fields of economics and political science: the public choice approach, the tragedy of the commons debate, the ‘new’ institutional economics, and behavioral game theory. Then, the components of a basic institutional analysis framework are presented that provide a general method for analyzing public economies and diverse forms of collective action. Empirical research related to metropolitan public economies, common-pool resources, and behavioral game theory is summarized that has contributed to the field of institutional analysis. The last section concludes that the macro foundations of institutional analysis appear firmer than the micro foundations related to the model of the individual to be used and discusses this puzzle.

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