Learning, Institutions, and Economic Performance
AbstractIn this article, we provide a broad overview of the interplay among cognition, belief systems, and institutions, and how they affect economic performance. We argue that a deeper understanding of institutions’ emergence, their working properties, and their effect on economic and political outcomes should begin from an analysis of cognitive processes. We explore the nature of individual and collective learning, stressing that the issue is not whether agents are perfectly or boundedly rational, but rather how human beings actually reason and choose, individually and in collective settings. We then tie the processes of learning to institutional analysis, providing arguments in favor of what can be characterized as “cognitive institutionalism.” Besides, we show that a full treatment of the phenomenon of path dependence should start at the cognitive level, proceed at the institutional level, and culminate at the economic level.
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Bibliographic InfoPaper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2003_13.
Length: 19 pages
Date of creation: Dec 2003
Date of revision:
Publication status: Published in Perspectives on Politics, vol. 2 No. 1, March 2004, pp. 75-84
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-25 (All new papers)
- NEP-CBE-2005-07-25 (Cognitive & Behavioural Economics)
- NEP-EVO-2005-07-25 (Evolutionary Economics)
- NEP-FMK-2005-07-25 (Financial Markets)
- NEP-HPE-2005-07-25 (History & Philosophy of Economics)
- NEP-LAM-2005-07-25 (Central & South America)
- NEP-PKE-2005-07-25 (Post Keynesian Economics)
- NEP-SOC-2005-07-25 (Social Norms & Social Capital)
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