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Institutions interact with economic actors: plea for a general institutional economics

Institutions interact with economic actors: plea for a general institutional economics In contrast to traditional welfare economics, new institutional economics has made a major contribution to analyzing institutions as both preconditions and elements of economic activities. By including institutions’ incentives and restrictions on human beings, it has made a significant first step toward the further development of economic science. The usual starting point, however, is a world without uncertainty where so‐called “anomalies” from “rational” behavior cannot occur; but in this world, institutions are not necessary either. Related research demonstrates the relevance of factors like intrinsic motivation, internalization of norms, habit formation, etc., but these characteristics are typically treated in a half‐hearted way as mere anomalies. Instead, it is time to take the full second step and to include the effects of institutions on economic actors as well as to take the third step, namely, to consider the fact that economic agents form institutions. We exemplify these further steps and look on the interaction between institutions and economic actors which leads to a general institutional economics. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Social Economics Emerald Publishing

Institutions interact with economic actors: plea for a general institutional economics

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Publisher
Emerald Publishing
Copyright
Copyright © 2003 MCB UP Ltd. All rights reserved.
ISSN
0306-8293
DOI
10.1108/03068290310460143
Publisher site
See Article on Publisher Site

Abstract

In contrast to traditional welfare economics, new institutional economics has made a major contribution to analyzing institutions as both preconditions and elements of economic activities. By including institutions’ incentives and restrictions on human beings, it has made a significant first step toward the further development of economic science. The usual starting point, however, is a world without uncertainty where so‐called “anomalies” from “rational” behavior cannot occur; but in this world, institutions are not necessary either. Related research demonstrates the relevance of factors like intrinsic motivation, internalization of norms, habit formation, etc., but these characteristics are typically treated in a half‐hearted way as mere anomalies. Instead, it is time to take the full second step and to include the effects of institutions on economic actors as well as to take the third step, namely, to consider the fact that economic agents form institutions. We exemplify these further steps and look on the interaction between institutions and economic actors which leads to a general institutional economics.

Journal

International Journal of Social EconomicsEmerald Publishing

Published: Mar 1, 2003

Keywords: Economics; Institutional analysis; Motivation; Transaction costs

References