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An Agent-Based Model of Institutional Life-Cycles

Author

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  • 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, 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

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    1. Torsten Heinrich & Henning Schwardt, 2013. "Institutional Inertia and Institutional Change in an Expanding Normal-Form Game," Games, MDPI, 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.
    4. D’Ippoliti, Carlo, 2011. "Economics And Diversity," Journal of the History of Economic Thought, Cambridge University Press, vol. 33(4), pages 562-564, December.
    5. Elsner, Wolfram & Heinrich, Torsten & Schwardt, Henning, 2014. "The Microeconomics of Complex Economies," Elsevier Monographs, Elsevier, edition 1, number 9780124115859, December.
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    Cited by:

    1. Claudius Gräbner & Jakob Kapeller, 2015. "New Perspectives on Institutionalist Pattern Modeling: Systemism, Complexity, and Agent-Based Modeling," Journal of Economic Issues, Taylor & Francis Journals, vol. 49(2), pages 433-440, April.
    2. Hanappi, Hardy & Scholz-Waeckerle, Manuel, 2015. "Evolutionary Political Economy: Content and Methods," MPRA Paper 75447, University Library of Munich, Germany.
    3. S. Chepik G. & O. Chepik V. & С. Чепик Г. & О. Чепик В., 2019. "Проблемы и перспективы формирования и рационального использования местного бюджета сельской территории // Problems аnd Prospects оf Development аnd Rational Use оf the Local Budget оf а Rural Territor," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 23(2), pages 58-73.
    4. Teglio, Andrea & Mazzocchetti, Andrea & Ponta, Linda & Raberto, Marco & Cincotti, Silvano, 2019. "Budgetary rigour with stimulus in lean times: Policy advices from an agent-based model," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 59-83.
    5. 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).

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