The Origin of Institutions: Socio-Economic Processes, Choice, Norms and Conventions

Institutions, the way they are related to the behaviour of the agents and to the aggregated performance of socio-economic systems, are the topic addressed by this essay. The research is based on a particular concept of a bounded rational agent living in society and by a population based simulation model that describes the processes of social learning. From simple co-ordination problems, where conventions spontaneously emerge, to situations of choice over alternative constitutional rules, simulation was used as a means to test the consistency and extract the implications of the models. Institutions, as solutions to recurring problems of social interaction, are both results and preconditions for social life, unintended outcomes and human devised constraints. In an evolutionary setting no support is found for the deep rooted beliefs about the 'naturally' beneficial outcomes generated by 'invisible-hand' processes or by any alternative Hobbesian meta-agency.