The Emergence of Efficient Institutions and Social Interactions
AbstractInstitutions are the equilibrium states of games, and the emergence of institutions is an evolutionary, stochastic, and (social) structural dependence process of interactions among agents. In this paper, we address the relationship between the institutional emergence and the structure of social interactions under the context of (network) coordination games. The model here shows when the agents are socially restricted, and individual decision-making is based on mutual agreements, inefficient institutions will be the stable states in the long run, say, institutions are locked-in inefficiently. When the agents are not restricted socially, the institutional stability will wander between two states. The efficient institutions can emerge only as the agents are facing strong cost constraints and, are in the contexts with relative high certainties, for instance, as the interactive population size is becoming smaller.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 47011.
Date of creation: 01 Jul 2012
Date of revision:
Institutional Emergence; Coordination Games; Stochastically Stable Equilibrium; Network Formation; Social Distance;
Find related papers by JEL classification:
- B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-19 (All new papers)
- NEP-EVO-2013-05-19 (Evolutionary Economics)
- NEP-NET-2013-05-19 (Network Economics)
- NEP-SOC-2013-05-19 (Social Norms & Social Capital)
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