Democratic Basis

This chapter concerns the relationship between contract law and democracy. The central question is whether contract law, in order to be legitimate, must have a democratic basis, and what this would entail. This leads to a normative institutional comparison between legislators, courts, legal academics, and economic-sectoral experts as the protagonists in contract law making. In addition, beyond the matter of institutional choice, the question of democratic legitimacy may lead to the question of whether there are any limits as to the kind of reasons (‘public reasons’) that can justify the law, in our case European contract law.

Presidential power effects on government and ministerial durability: evidence from Central and Eastern Europe

In this article, we examine the variation in the institutional powers granted to president to terminate cabinets (by dismissing prime ministers), and appointing ministers to show how variations affect both cabinet durability (and the mode of cabinet termination) and ministerial durability (i.e., the overall time a minister remains in cabinet). Using the most extensive survival data set on ministers in 14 Central and Eastern European countries available to date alongside data on government survival, our Cox regression models demonstrate that the institutional rules granting extensive powers to the presidents are powerful determinants of ministerial durability. We show that the effect of presidential powers reduces cabinet durability but increases ministerial durability. These results demonstrate that the specific powers given to chief executives are essential for issues surrounding implications for ministerial and cabinet durability, institutional choice, policy stability, and governmental accountability.

Austrian behavioral economics

This paper explores the potential for gains from trade between Austrian and behavioral economics, with a focus on how the two schools of thoughts can constructively critique each other. Among other things, the Austrian critique of behavioral economics would urge it to jettison its restrictive and axiomatic definition of rationality, and to treat humans as active agents rather than passive recipients of environmental and cognitive influences. Meanwhile, the behavioral critique of Austrian economics would push it to take more seriously the fundamental question of how individuals arrive at choices and to analyze how such choices can interact with ‘micro-institutional’ choice environments.

Information and Institutional Choice in Models of Agency Interactions

The paper discusses the neo-institutional approach to the study of agent interactions based on information exchange and the institutional choice for the use of a common resource. The aim of the study is to formalize the model of interaction between two agents exchanging information and finding various modes of such exchange, which are determined by the influence of in-formation transfer of institutions. This enables us to adjust the standard scheme applied to study the institutional choice, which involves the demonstration of the Prisoner’s Dilemma game take and discussion of the example of adverse selection. The research methodology is based on the theory of new institutionalism developed by the Coase-Ostrom scientific school. We expand this approach by removing model constraints and conventions of institutional choice to describe the general theoret-ical provisions covering various institutional situations that are difficult to study only through field research. This research also discusses the questions not taken into account by the above-mentioned methodology: the institutions as a kind of a common resource and behavior of agents in situations where there is no institutional choice or the choice is determined by the criteria other than the expected benefits and costs and not only by a set of normally established situational variables. The proposed model results not only in finding information exchange regimes and the types of adaptation of the correspond-ing agents, but also in the determination of an acceptable decision-making zone within the framework of institutional choice, according to simultaneously applied criteria — an increase in the general welfare, material component of welfare and reduction in information asymmetry. It is shown that the regulatory parameters that correspond to the influence of institutions on the transfer of information from one agent to another can be dependent or not, but affect their respective channels of information transfer in their own way. The adverse selection model is determined not only by information asymmetry, but also by other institutional conditions related to the characteristics of a given market, a third party’s influence on the deal, as opposed to the external effect mechanism. This brings us to the fact that the inherent properties of adverse selection — lowering of the price of goods and quality loss — cease to have effect. Areas of future research may include an expanded application of this model to institutions as a public resource.

Expert Ministers in New Democracies: Delegation, Communist Legacies, or Technocratic Populism?

This article examines the appointments and survival of expert ministers (i.e., ministers with educational and professional expertise in the portfolio to which they are appointed) in new democracies. Using a novel data set on 11 Central and Eastern European countries from 1990 until 2012, I test competing hypotheses derived from delegation theory, communist legacies approach, technocratic populism studies, and semi-presidentialism literature. The first study shows that experts without political experience (technocrats) have specific cabinet appointment patterns distinguishing them from party politicians and politically experienced experts. For example, technocrats have high chances of being appointed during an economic downturn. The conditional risk set survival analysis has revealed that compared to their politically experienced colleagues, technocrats have higher chances of remaining in their positions if there was a change in the PM’s candidacy. Moreover, they have long careers independently of the continuity of the PM’s party in government and the PM’s partisan status. Strikingly, patterns of portfolio specialization from the communist period remained in place after the regime change (e.g., expert ministers holding the portfolios of finance and economy). However, holding these specific portfolios does not decrease the minister’s risk of being dismissed. These findings have ramifications for issues surrounding cabinet formation, institutional choice, and populism in new democracies.