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An Agent-Based Model of Institutional Life-Cycles

Author

Listed:
  • Manuel Wäckerle

    () (Institute for Ecological Economics, Department Socioeconomics, Vienna University of Economics and Business, Welthandelsplatz 1/D4/2nd Floor/D4.2.232, 1020 Wien, Austria)

  • Bernhard Rengs

    () (Institute of Mathematical Methods in Economics, Research Group Economics, Vienna University of Technology, Argentinierstraße 8/4/105-3, 1040 Wien, Austria)

  • Wolfgang Radax

    () (Institute of Mathematical Methods in Economics, Research Group Economics, Vienna University of Technology, Argentinierstraße 8/4/105-3, 1040 Wien, Austria)

Abstract

We use an agent-based model to investigate the interdependent dynamics between individual agency and emergent socioeconomic structure, leading to institutional change in a generic way. Our model simulates the emergence and exit of institutional units, understood as generic governed social structures. We show how endogenized trust and exogenously given leader authority influences institutional change, i.e. , diversity in institutional life-cycles. It turns out that these governed institutions (de)structure in cyclical patterns dependent on the overall evolution of trust in the artificial society, while at the same time, influencing this evolution by supporting social learning. Simulation results indicate three scenarios of institutional life-cycles. Institutions may, (1) build up very fast and freeze the artificial society in a stable but fearful pattern (ordered system); (2) exist only for a short time, leading to a very trusty society (highly fluctuating system); and (3) structure in cyclical patterns over time and support social learning due to cumulative causation of societal trust (complex system).

Suggested Citation

  • Manuel Wäckerle & Bernhard Rengs & Wolfgang Radax, 2014. "An Agent-Based Model of Institutional Life-Cycles," Games, MDPI, Open Access Journal, vol. 5(3), pages 1-28, August.
  • Handle: RePEc:gam:jgames:v:5:y:2014:i:3:p:160-187:d:39316
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    References listed on IDEAS

    as
    1. Torsten Heinrich & Henning Schwardt, 2013. "Institutional Inertia and Institutional Change in an Expanding Normal-Form Game," Games, MDPI, Open Access Journal, vol. 4(3), pages 1-28, August.
    2. Sanchez-Pages Santiago & Straub Stéphane, 2010. "The Emergence of Institutions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-38, September.
    3. McElreath, Richard & Boyd, Robert, 2007. "Mathematical Models of Social Evolution," University of Chicago Press Economics Books, University of Chicago Press, number 9780226558264, August.
    4. D’Ippoliti, Carlo, 2011. "Economics And Diversity," Journal of the History of Economic Thought, Cambridge University Press, vol. 33(04), pages 562-564, December.
    5. Elsner, Wolfram & Heinrich, Torsten & Schwardt, Henning, 2014. "The Microeconomics of Complex Economies," Elsevier Monographs, Elsevier, edition 1, number 9780124115859, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Marko Petrovic & Bulent Ozel & Andrea Teglio & Marco Raberto & Silvano Cincotti, 2017. "Eurace Open: An agent-based multi-country model," Working Papers 2017/09, Economics Department, Universitat Jaume I, Castellón (Spain).
    2. Hanappi, Hardy & Scholz-Waeckerle, Manuel, 2015. "Evolutionary Political Economy: Content and Methods," MPRA Paper 75447, University Library of Munich, Germany.
    3. Gräbner, Claudius & Kapeller, Jakop, 2015. "New Perspectives on Institutionalist Pattern Modeling: Systemism, Complexity, and Agent-Based Modeling," MPRA Paper 77334, University Library of Munich, Germany.

    More about this item

    Keywords

    institutional economics; institutional life-cycles; agency-structure dynamics; iterated prisoners dilemma; agent-based modeling; applied game theory; evolutionary political economy; complexity;

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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