Lock-in institutions and efficiency
Economists who emphasize path dependence generally dispute, at first approximation, the effectiveness of rational choice in understanding institutions. Such economists, belonging to the original (old) institutional economics and the historical school maintain that the constraint function is riddled with inefficient technologies and institutions which agents fail to replace with superior ones even when the switching cost is clearly lower than expected benefit. The argument ultimately rests on a theory of action á la Herbert Simon—where agents become habituated for whatever is the default institution. Such a theory recognizes that agents are ready to replace habits with more viable ones—but only when agents face shocks or crises. Such recognition, though, necessarily allows rational choice, in the sense of responsiveness to incentives, to enter from the rear window: after all, shocks and crises are merely severe incentives.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Khalil, Elias L., 2009. "Self-deceit and self-serving bias: Adam Smith on ‘General Rules’," Journal of Institutional Economics, Cambridge University Press, vol. 5(02), pages 251-258, August.
- Geoffrey Hodgson & Thorbjørn Knudsen, 2004. "The firm as an interactor: firms as vehicles for habits and routines," Journal of Evolutionary Economics, Springer, vol. 14(3), pages 281-307, 07.
- Vernon L. Smith, 2003.
"Constructivist and Ecological Rationality in Economics,"
American Economic Review,
American Economic Association, vol. 93(3), pages 465-508, June.
- Smith, Vernon L., 2002. "Constructivist and Ecological Rationality in Economics," Nobel Prize in Economics documents 2002-7, Nobel Prize Committee.
- Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, June.
- David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
- Stephen E. Margolis & S.J. Liebowitz, .
"Path Dependence, Lock-in and History,"
Working Paper Series
10, North Carolina State University, Department of Economics.
- Elias L. Khalil, 2010. "Adam Smith'S Concept Of Self-Command As A Solution To Dynamic Inconsistency And The Commitment Problem," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 177-191, 01.
- Geoffrey M. Hodgson, 1998. "The Approach of Institutional Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 166-192, March.
- Khalil, Elias L., 2010. "The Bayesian fallacy: Distinguishing internal motivations and religious beliefs from other beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 268-280, August.
- Boland, Lawrence A, 1981. "On the Futility of Criticizing the Neoclassical Maximization Hypothesis," American Economic Review, American Economic Association, vol. 71(5), pages 1031-36, December.
- Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
- Paul A. David, 1999.
"At last, a remedy for chronic QWERTY-skepticism!,"
99025, Stanford University, Department of Economics.
- Choi, Young Back, 2008. "Path dependence and the Korean alphabet," Journal of Economic Behavior & Organization, Elsevier, vol. 65(2), pages 185-201, February.
- Liebowitz, S J & Margolis, Stephen E, 1990. "The Fable of the Keys," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 1-25, April.
- S. J. Liebowitz & Stephen E. Margolis, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-150, Spring.
- repec:oup:qjecon:v:116:y:2001:i:1:p:81-119 is not listed on IDEAS
- Douglass C. North, 2005.
"Introduction to Understanding the Process of Economic Change
[Understanding the Process of Economic Change]," Introductory Chapters, Princeton University Press.
- Elias L. Khalil, 2012. "Temptations: A General Theory of Over-eating, Under-saving, Favoritism, Certainty Effect, Spoiling of Children, Pornography-Viewing, and Regretting," Monash Economics Working Papers 26-12, Monash University, Department of Economics.
- Khalil, Elias L, 1997. "Buridan's Ass, Risk, Uncertainty, and Self-Competition: A Theory of Entrepreneurship," Kyklos, Wiley Blackwell, vol. 50(2), pages 147-63.
- Felin, Teppo & Foss, Nicolai J., 2011. "The endogenous origins of experience, routines, and organizational capabilities: the poverty of stimulus," Journal of Institutional Economics, Cambridge University Press, vol. 7(02), pages 231-256, June.
When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:88:y:2013:i:c:p:27-36. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.