MATHEMATICAL MODELLING FOR INSTITUTIONAL DESIGN
Igor L. KIRILYUK
Junior Researcher, Institute of Economics of RAS, Moscow, Russia
Junior Researcher, Institute of Economics of RAS, Moscow, Russia
TERRA ECONOMICUS, 2019, Vol. 17 (no. 3),
Institutional design is a targeted change to the system of socio-economic institutions. This concept is widely used in English-language literature, also sometimes in Russian-language publications. In economics, institutional design processes include the establishment of rules for the use of public resources, the implementation of economic reforms, the creation and reform of economic organizations that significantly affect relations between groups of economic agents, etc. From the many publications in which the processes of institutional design are discussed, the author, using databases such as google scholar, elibrary.ru and search sites, selected for analysis those where the application of mathematical models and calculations takes place. Some of them do not contain the term “institutional design”, but contain its synonyms or describe particular cases of its application. This article suggests the classification of mathematical models used in these publications. Among them are econometric models, models of general economic equilibrium, econophysical models involving the application in economics of the methods of the theory of nonlinear dynamic systems, models of game theory (in particular, evolutionary game theory and game theory related to the collective use of resources), and imitation models. Examples of publications about specific types of models are given. The strengths and weaknesses of the use of various types of models and mathematical methods are indicated and the prospects for their use are discussed. Particular attention is paid to the use of information technology in institutional design, which is actively developing due to the presence of the Internet and large computing power, as well as the development and adoption of blockchain technology by society
Citation: Kirilyuk, I. L. (2019). Mathematical modelling for institutional design. Terra Economicus, 17(3), 64–77. DOI: 10.23683/2073-6606-2019-17-3-64-77
Keywords: institutional design; institutional economy; mesoeconomics; economic-mathematical modeling; game theory; effective altruism; econophysics; evolutionary economics
- Akhremenko, A. S., Petrov, A. P., & Mikhailov, A. P. (2015). Formal theory in institutional
political science: Is there life outside the theory of games? Political Science, (2), 39–61.
- Anderies, J. M. (2014). Understanding the dynamics of sustainable social-ecological systems:
Human behavior, institutions, and regulatory feedback networks. Bulletin of
Mathematical Biology, 77(2), 259–280.
- Barbashin, M. Y. (2017). Imitation modeling and institutional studies. Journal of Institutional
Studies, 9(3), 81–96. (In Russian.)
- Beddies, C. H. (2000). Selected issues concerning monetary policy and institutional design
for central banks – a review of theories. Working Paper №140, International Monetary
- Berezovskaya, F. S., Kareva, I. G., & Karev, G. P. (2012). Is it possible to prevent the “Tragedy
of Common Resource”? Mat. Biolog. Bioinform., 7(1), 30–44. (In Russian.)
- Burkov, V. N., & Novikov, D. A. (2009). Theory of Active Systems – 40 years / In: V. N. Burkov
& D. A. Novikov (eds.) Theory of Active Systems. Proceedings of the international scientific-
practical conference (November 17–19, 2009, Moscow, Russia), vol I. Moscow:
Institute of Control Sciences of the Russian Academy of Sciences, 314 p. (In Russian.)
- Bykonya, S. F. (2010). Institutional Construction: Principles and Directions. Scientific
works of the Donetsk National Technical University. Series: Economics (38-1), 42–49.
- Castillo, D., & Saysel, A. K. (2005). Simulation of Common Pool Resource Field Experiments:
A Behavioural Model of Collective Action. Ecological Economics, 55, 420–436.
Chen, T.-Y. (1998). A study of bank efficiency and ownership in Taiwan. Applied Economics
Letters, 5, 613–616.
- Chernavsky, D. S. (2009). Synergetics and information: Dynamic information theory. Moscow:
LKI Publ., 304 p. (In Russian.)
- Gavrilets, Yu. N., & Tarakanova, I. V. (2015). Model of privatization in the conditions of economic
equilibrium: the experience of computer analysis, pp. 5–19 / In: N. N. Gavrilets
(ed.) Mathematical and computer modeling of socio-economic processes. Collection of
scientific works, Issue 6. Moscow: CEMI RAS Publ. (In Russian.)
- Hashimoto, T., & Nishibe, M. (2017). Theoretical model of institutional ecosystems and its
economic implications. Evolut Inst Econ Rev, 14, 1–27.
- Izmalkov, S., Sonin, K., & Yudkevich, M. (2008). The Theory of Economic Mechanisms (Nobel
Prize in Economics 2007). Voprosy ekonomiki, (1), 4–26. (In Russian.)
- Katkova, M. A., & Markov, V. A. (2014). Application of transaction hysteresis effect in modelling
institutional nonequilibrium economy. Bulletin of the Tomsk polytechnic university.
Social and humanity technologies, 325(6), 112–119. (In Russian.)
- Keser, C., & Gardner, R. (1999). Strategic behavior of experienced subjects in a common
pool resource game. International Journal of Game Theory, 28(2), 241–252.
- Kirdina, S. G. (2010). Institutional changes and the Curie principle. Economics of Contemporary
Russia, (4), 28–62. (In Russian.)
- Kirilyuk, I. L., Kuznetsova, A. V., Senko, O. V., & Morozov, A. M. (2017). Method for detecting
significant patterns in panel data analysis. Pattern Recognition and Image Analysis
(Advances in Mathematical Theory and Applications), 27(1), 94–104.
- Kruglova, M. S. (2018). Theory of institutional design: from the search for ideal institutions
to the works of Blomington school. Теrrа Economicus, 16(4), 17–28. (In Russian.)
- Makarov, V. L. (2003). Calculus of institutions. Economics and the Mathematical Methods,
39(2), 14–32. (In Russian.)
- Malkov, S. Yu., & Kirilyuk, I. L. (2013). Modeling the dynamics of competing communities:
interaction options. Information wars, (2), 49–56. (In Russian.)
- Mamonov, M. Ye., & Pestova, A. A. (2015). Analysis of technical efficiency of national economies:
the role of institutions, infrastructure and resource rent. Journal of the New
Economic Association, (3), 44–78. (In Russian.)
- Nazarov, P. A. (2016). Modeling the influence of the institutional environment on the main
macroeconomic indicators. Dissertation submitted for the degree of Cand. Sci. Economics.
Moscow. (In Russian.)
- Ng, Y.-K. (1975). Bentham or Bergson? Finite Sensibility, Utility Functions and Social Welfare
Functions. Review of Economic Studies, 42(4), 545–569.
- North, D. (1990). Institutions, Institutional Change and Economic Performance. Cambridge
- Obydenov, A. Yu. (2018). Mathematical formalization of institutions. Strategic decisions
and risk management, (4), 54–57. (In Russian.)
- Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for Collective Action.
Cambridge University Press.
- Ostrom, E., Gardner, R., & Walker, J. (1994). Rules, Games, and Common-pool Resources.
University of Michigan Press.
- Petrov, A. A. (1999). Analysis of perestroika and reform of the Russian economy by methods
of mathematical modeling. Economic Science of Modern Russia, (4), 7–44. (In Russian.)
- Polterovich, V. M., & Starkov, O. Yu. (2005). Creating a massive mortgage in Russia: the
problem of transplantation. Scientific Reports №R2-2005. Saint Petersburg: Research
Institute of Management, St. Petersburg State University Publ. (In Russian.)
- Polterovich, V. M., Popov, V. V., & Tonis, A. S. (2009). The concentration of income, the instability
of democracy and economic growth since 2009. Economics and Mathematical
Methods, 45(1), 15–29. (In Russian.)
- Sadovnichii, V. A., Akayev, A. A, Korotaev, A. V., & Malkov, S. Yu. (2014). Comprehensive
modeling and forecasting of the development of the BRICS countries in the context of
world dynamics / Scientific Council on the Fundamental Research Fund. Presidium of
the Russian Academy of Sciences «Economics and Sociology of Science and Education
». Moscow: Publishing House «Nauka». (In Russian.)
- Shapley, L. S., & Shubik, M. (1964). Ownership and the Production Function. Cowles Foundation
Discussion Papers 167. Cowles Foundation for Research in Economics, Yale University.
- Shaposhnikova, G. A., Plotnikova, L. A., & Plotnikova, M. Yu. (2012). Mathematical modeling
of the process of housing privatization in Russia taking into account the psychological
and price factors. Survey of Applied and Industrial Mathematics, 19(4), 603. (In
- Shibata, K. (1933). Marx’s Analysis of Capitalism and the General Equilibrium Theory of
the Lausanne School. Kyoto University Economic Review, 8(1), 107–136.
- Skoorbogatov, A. S. (2014). Evolutionary choice of institutional norms in the non-ergodic
environment. Journal of Institutional Studies, 6(4), 98–115. (In Russian.)
- Slovohotov, Yu. L. (2010). Analogues of phase transitions in economics and demography.
Computer Research and Modeling, 2(2), 209–218. (In Russian.)
- Tsirel, S. V. (2005). QWERTY effects, path dependenge and Sedov’s law, or is it possible to
grow sustainable institutions in Russia. Economic Herald of Rostov State University,
3(3), 44–56. (In Russian.)
- Tuktamysheva, L. M. (2014). Evaluation of the impact of WTO conditions on the dynamics
of socio-economic indicators of the Orenburg region. Bulletin of Orenburg State University,
(14), December, 471–476. (In Russian.)
- Vasin, A. A. (2009). Evolutionary game theory and economics. Part 1. Principles of optimality
and models of behavior dynamics. Journal of the New Economic Association, (3),
10–27. (In Russian.)
- Vasin, A. A. (2010). Evolutionary game theory and economics. Part 2. Stability of equilibria.
Peculiarities of the evolution of social behavior. Journal of the New Economic
Association, (5), 10–27. (In Russian.)
- Volchik, V. V. (2003). Institutionalism: the secondary nature of the new myth? (Opportunities
and Limits of Institutional Economics). The Economic Herald of Rostov State
University, 1(1), 126–134. (In Russian.)
- Volynskii, A. I. (2018). Institutional design and theory of reforms in Russian economic
discourse. Теrrа Economicus, 16(4), 29–40. (In Russian.)
- Yanovski, K., & Shulgin, S. (2008). Institutions, Democracy and Economic Growth, a Test of
180 Years of Development. Economic Policy, (3), June, 57–75. (In Russian.)
- Zhuk, A. A. (2011). The failures of the institutional construction of a competitive environment.
Economic Sciences, (5), 44–49. (In Russian.)
Publisher: Southern Federal University
Founder: Southern Federal University
Founder: Southern Federal University