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Rationality, Information Power and Institutional Theory

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  • Alessandro Morselli

Abstract

The objective of this paper is to show the importance of the role played by ‘power’ in economic analysis and how this, through information asymmetry, leads to the exercise of economic power of one unit over other units. This power derives from inequality in the amount of information possessed. The problem then arises of identifying tools to reduce the asymmetric information that generates the ‘domination’ effect of one individual over another. Institutional arrangements have been identified as alternative tools to the price mechanism, in order to favour individual decisions in a scenario marked by power, information and cognitive bounds. Thus, it will be highlighted how institutions favour symmetry in the conflicting relations of economic powers, in order to counteract the formation of unbalanced relations.

Suggested Citation

  • Alessandro Morselli, 2021. "Rationality, Information Power and Institutional Theory," Review of Economics and Institutions, Università di Perugia, vol. 12(2).
    • Handle: RePEc:pia:review:v:12:y:2021:i:2:n:3
    DOI: 10.5281/zenodo.5920950
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    More about this item

    Keywords

    Information asymmetry; Domination; Uncertainty; Institutions; Power; rationality;
    All these keywords.

    JEL classification:

    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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