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The Role of Agents’ Propensity toward Conformity and Independence in the Process of Institutional Change

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  • Angela Ambrosino

Abstract

This paper analyses institutional change and Veblen’s work (1907, 1914, 1919) under the perspective of cognitive economics. Particularly it focuses on two interesting issues of Veblen’s theory of economic change: 1. in Veblen’s view habits are both mental habits and behavioral habits and they play a twofold role in economic change because they are particularly relevant both as elements of propensity, and as forces resisting to change. 2 Veblen gives an exhaustive definition of instincts and habits but he does not completely explain the cognitive processes that bring changes and evolution in social habits. He develops an economic theory at the base of which there is an evolutionary view of reality and a deep awareness of the role of the human mind within the decision-making processes of choice. This paper is aimed at analyzing both issues using the interpretive tools offered by psychology and discussing the role of agents psychological propensity toward conformity and independence in explaining institutional change. The central idea is that if we better encompass the theory of conformity and independence developed in psychology (starting from Asch, 1952) in the analysis of economic institutions, we can better explain institutional change. Conformity is the effect of the pressure of social group on agents’ behavior. That concept contributes to explain resistance to change. On the other hand, psychology shows that agents are also subject to mechanisms of independence. These are key elements in explaining behavioral change. The analysis of Veblen’s instinct-habit concept under conformity-independence perspective shows interesting connections between Veblen and Hayek’s ideas of economic change. Hayek’s concept of evolution based on psychological and neurobiological aspect, in fact, is a contribution of great significance both in explaining the dual role of habits in institutional change and in understanding individual mechanisms that bring changes in social habits.

Suggested Citation

  • Angela Ambrosino, 2017. "The Role of Agents’ Propensity toward Conformity and Independence in the Process of Institutional Change," STOREPapers 1_2017, Associazione Italiana per la Storia dell'Economia Politica - StorEP.
  • Handle: RePEc:hpo:wpaper:1_2017
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    References listed on IDEAS

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    1. Thorstein Veblen, 1909. "The Limitations of Marginal Utility," Journal of Political Economy, University of Chicago Press, vol. 17, pages 620-620.
    2. Crusius, Jan & van Horen, Femke & Mussweiler, Thomas, 2012. "Why process matters: A social cognition perspective on economic behavior," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 677-685.
    3. Dequech, David, 2013. "Economic institutions: explanations for conformity and room for deviation," Journal of Institutional Economics, Cambridge University Press, vol. 9(1), pages 81-108, March.
    4. Klick, Jonathan & Parisi, Francesco, 2008. "Social networks, self-denial, and median preferences: Conformity as an evolutionary strategy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1319-1327, August.
    5. Ambrosino, Angela, 2009. "Institutions as game theory outcomes: toward a cognitive-experimental inquiry," MPRA Paper 42752, University Library of Munich, Germany, revised 2013.
    6. Geoffrey M. Hodgson, 1998. "The Approach of Institutional Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 166-192, March.
    7. Egidi Massimo & Rizzello Salvatore, 2003. "Cognitive economics: Foundations and historical evolution," CESMEP Working Papers 200304, University of Turin.
    8. Angela Ambrosino, 2014. "A Cognitive Approach to Law and Economics: Hayek's Legacy," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(1), pages 19-48.
    9. Walker, Donald A, 1977. "Thorstein Veblen's Economic System," Economic Inquiry, Western Economic Association International, vol. 15(2), pages 213-237, April.
    10. Rutherford, Malcolm, 2000. "Understanding Institutional Economics: 1918–1929," Journal of the History of Economic Thought, Cambridge University Press, vol. 22(3), pages 277-308, September.
    11. Veblen, Thorstein, 1909. "The Limitations of Marginal Utility," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 17.
    12. J. M. Clark, 1918. "Economics and Modern Psychology: II," Journal of Political Economy, University of Chicago Press, vol. 26, pages 136-136.
    13. Carpenter, Jeffrey P., 2004. "When in Rome: conformity and the provision of public goods," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(4), pages 395-408, September.
    14. Leathers, Charles G., 1990. "Veblen and Hayek on Instincts and Evolution," Journal of the History of Economic Thought, Cambridge University Press, vol. 12(2), pages 162-178, October.
    15. Asso, Pier Francesco & Fiorito, Luca, 2004. "Human Nature and Economic Institutions: Instinct Psychology, Behaviorism, and the Development of American Institutionalism," Journal of the History of Economic Thought, Cambridge University Press, vol. 26(4), pages 445-477, December.
    16. Beraldo, Sergio & Filoso, Valerio & Marco, Stimolo, 2013. "Endogenous Preferences and Conformity: Evidence From a Pilot Experiment," MPRA Paper 48539, University Library of Munich, Germany.
    17. repec:mes:jeciss:v:22:y:1988:i:1:p:113-126 is not listed on IDEAS
    18. Thorstein Veblen, 1907. "The Socialist Economics of Karl Marx and his Followers," The Quarterly Journal of Economics, Oxford University Press, vol. 21(2), pages 299-322.
    19. Ambrosino, Angela, 2016. "Heterogeneity and law: toward a cognitive legal theory," Journal of Institutional Economics, Cambridge University Press, vol. 12(2), pages 417-442, June.
    20. Di Giovinazzo, Viviana & Naimzada, Ahmad, 2012. "… Do as the Romans do. A model of conformity with the endogenous formation of preferences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 654-658.
    21. Caldwell, Bruce, 2000. "The Emergence of Hayek's Ideas on Cultural Evolution," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 13(1), pages 5-22, February.
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    Keywords

    Institutional change; old institutional economics; cognitive economics; Veblen; Hayek;

    JEL classification:

    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian

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