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Institutional Changes: Alternative Theories and Consequences for Institutional Design

Listed author(s):
  • Pierre Garrouste

    ()

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - CNRS - Centre National de la Recherche Scientifique)

  • E. Brousseau

    (EconomiX - UPOND - Université Paris Ouest Nanterre La Défense - CNRS - Centre National de la Recherche Scientifique)

  • E. Raynaud

    (DEPT SAD - Département Sciences pour l'Action et le Développement - INRA - Institut National de la Recherche Agronomique)

This paper surveys alternative approaches to the emergence and evolution of institutions. The challenge is to develop frameworks capable of capturing both stability and change. We follow a "descaling" approach to show how founding assumptions about economics--namely, alternative assumptions about individual rationality and the role of social efficiency--influence our understanding of the drivers of institutional evolution. We then contrast two families of institutional theory. In the first, institutions are viewed as rules imposed on individuals and the focus is on the strategic games among coalitions that aim to promote or block new rules. In the second, institutions are viewed as shared beliefs; here the idea is to analyze how equilibria that are self-enforcing (in terms of mutual expectations about others' behaviors) can collapse and so induce switching to another equilibrium. Finally, we discuss the political economy literature that examines institutional transitions to a market economy, and we identify long-term drivers as well as short-term political barriers to institutional reforms.

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Paper provided by HAL in its series Post-Print with number hal-00574577.

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Date of creation: 2011
Publication status: Published in Journal of Economic Behavior and Organization, Elsevier, 2011, 79 (1-2), pp.3-19. <10.1016/j.jebo.2011.01.024>
Handle: RePEc:hal:journl:hal-00574577
DOI: 10.1016/j.jebo.2011.01.024
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00574577
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