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Choosing a future based on the past: Institutions, behavior, and path dependence

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  • Bednar, Jenna
  • Jones-Rooy, Andrea
  • Page, Scott E.

Abstract

Institutions do not always produce behavior consistent with what theory predicts, leading comparative scholars to turn to explanations based on historical or cultural exceptionalism. Context can influence not only how an institution performs but also the very choices of institutions that societies choose to govern themselves. In this paper, we construct a model that produces contextual effects that result in institutional path dependence. In doing so, we provide formal foundations for qualitative arguments that context matters and identify a contributing causal mechanism: behavioral spillovers. Using both mathematical and computational techniques, we show that spillovers provide a mechanistic explanation for how pre-existing institutions affect the performance of new institutions as well as the optimal choice among institutions. We find that these spillovers can depend on either the set or the path of previous institutions. Both results support qualitative arguments that historical institutional contexts influence outcomes in current institutions. Importantly, the spillovers depend not only on the outcomes produced in the institutions but also on the specific behavior that produces the outcomes. As a result, we show that institutions that create diverse ensembles of behaviors generate better outcomes and less path dependence than those that cause all agents to converge on the identical strategy.

Suggested Citation

  • Bednar, Jenna & Jones-Rooy, Andrea & Page, Scott E., 2015. "Choosing a future based on the past: Institutions, behavior, and path dependence," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 312-332.
  • Handle: RePEc:eee:poleco:v:40:y:2015:i:pb:p:312-332
    DOI: 10.1016/j.ejpoleco.2015.09.004
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    More about this item

    Keywords

    Culture; Behavioral spillovers; Institutional sequencing; Development; Agent-based models; Computational modeling;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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