SFeDu
of.211, Gorgoko St., 88 
Rostov-on-Don
Russia
344002
+7 (863) 250-59-54
This email address is being protected from spambots. You need JavaScript enabled to view it.
te@sfedu.ru

TERRA ECONOMICUS

INSTITUTIONS AND INSTITUTIONAL CHANGE IN THE CONTEXT OF GAME THEORY

TERRA ECONOMICUS, , Vol. 18 (no. 1),

This study is inspired by a terminological collision, which can be expressed by the following question: if institutions are the «rules of the game», how do they relate to game theory? We admit that most researchers who have applied a gametheoretic approach in the context of institutional problems do not explicitly define «institution» within a simulated game. So it is not always clear what are the «rules of the game» in the specific game setting? The article aims to consider existing approaches to understanding and modelling institutions by various schools of institutionalism relying on the game theory formalism. As the starting point, we consider two limiting cases among the existing approaches, namely, institutions are presented as games themselves and as equilibria in the games. We pay special attention to the understanding of the institutions as game equilibria, but also analyze such approaches to institutions as game forms, correlation devices, information systems, and so on. Given the multifaceted nature of game theory, we focus on those types of game settings that may be useful for understanding institutional change, i.e., for modelling endogenous institutions. We treat endogenous institutions as subsystems in repeated games. We also compare two programs for modelling institutional change – the evolutionary-institutional approach to the institutions that regulate cooperation in the context of social dilemmas, as well as the modern political economy approach based on the commitment problem in the games with political power. A review of the requirements for game-theoretic formulation needed to model institutional change completes the study.
Citation: Gareev, T. R., Eliseeva, N. A. (2020). Institutions and institutional change in the context of game theory. Terra Economicus, 18(1), 102–120. DOI: 10.18522/2073-66062020-18-1-102-120


Keywords: institutions; institutional change; game theory; game equilibrium; evolutionary-institutional approach

References:
  • Acemoglu, D., Johnson, S. (2005). Unbundling Institutions. Journal of Political Economy, 13 (5), 949–995.
  • Acemoglu, D., Robinson, J. (2018). Economic Origins of Dictatorship and Democracy. Moscow: The Higher School of Economics Publishing House. (In Russian.)
  • Aoki, M. (2001). Toward a Comparative Institutional Analysis. Cambridge, MA, MIT Press.
  • Aoki, M. (2007). Endogenizing Institutions and Institutional Change. Journal of Institutional Economics, 3 (1), 1–31.
  • Belleflamme, P., Peitz, M. (2010). Industrial Organization: Markets and Strategies. Cambridge University Press.
  • Bowles, S. (2011). Microeconomics: Behavior, Institutions, and Evolution. Moscow: Publ. House «Delo». (In Russian.)
  • Bravo, G. (2011). Agents’ beliefs and the evolution of institutions for common-pool resource management. Rationality and Society, 23(1), 117–152.
  • Buchanan, J., Tullock, G. (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy. University of Michigan Press.
  • Dizikes, P. (2018). What game theory tells us about politics and society. MIT News Office (http://news.mit.edu/2018/game-theory-politics-alexander-wolitzky-1204 – Access Date: 06.09.2019).
  • Elsner, W. (2012) The Theory of Institutional Change Revisited: The Institutional Dichotomy, Its Dynamic, and Its Policy Implications in a More Formal Analysis. Journal of Economic Issues, 46 (1), 1–44.
  • Elsner, W., Heinrich, T., Schwardt, H. (2015). The Microeconomics of Complex Economies: Evolutionary, Institutional, Neoclassical and Complexity Perspectives. Elsevier.
  • Elsner, W., Heinrich, T., Schwardt, H., Grabner, C. (Eds.) (2014). Game Theory and Institutional Economics. MDPI.
  • Furubont, E., Richter, R. (2005). Institutions and Economic Theory: The Contribution of the New Institutional Economics. St. Petesburg: Publ. House of the St. Petersburg State University. (In Russian.)
  • Gehlbach, S., Sonin, K., Svolik, M. (2016). Formal Models of Nondemocratic Politics. Annual Review of Political Science, 19, 565–584.
  • Grabner, C., Ghorbani, A. (2019). Defining institutions – A review and a synthesis. ICAE Working Paper Series, No. 89. Linz: Johannes Kepler University Linz, Institute for Comprehensive Analysis of the Economy (ICAE).
  • Greif, A. (2013). Institutions and the Path to the Modern Economy. Lessons from Medieval Trade. Moscow: The Higher School of Economics Publishing House. (In Russian.)
  • Greif, A., Kingston, C. (2011). Institutions: rules or equilibria? pp. 13–44 / In: N. Schofield, G. Caballero (Eds.) Political economy of institutions. Berlin: Springer.
  • Hindrinks, F., Guala, F. (2015). Institutions, rules, and equilibria: a unified theory. Journal of Institutional Economics, 11(3), 459–480.
  • Hodgson, G. (2003). Economics and Institutions: A Manifesto for a Modern Institutional Economics. Moscow: Publ. House «Delo». (In Russian.)
  • Hodgson, G. (2006). What are institutions? Journal of Economic Issues, XL (1), 1–25.
  • Izmalkov, S., Sonin, K. (2017). Basics of contract theory (Nobel Memorial Prize in Economic Sciences 2016 – Oliver Hart and Bengt Holmström). Voprosy Ekonomiki, (1), 5–21. (In Russian.)
  • Jehle, G., Reny, P. (2011). Advanced Microeconomic Theory. Moscow: The Higher School of Economics Publishing House. (In Russian.)
  • Kapelushnikov, R. I. (2019). Contra Paninstitutionalism. WP3/2019/03. Moscow: The Higher School of Economics Publishing House. (In Russian.)
  • Khanin, G. (2016). Whether We Need the Current Economics and Economic Education? (On the book by V.M. Yefimov «Economic Science in Question»). Terra Economicus, 14 (3), 145–157. DOI: 10.18522/2073-6606-2016-14-3-145-157. (In Russian.)
  • Kosfeld, M., Okada, A., Riedl, A. (2009). Institution formation in public goods games. American Economic Review, 99 (4), 1335–1355.
  • Matthews, D. (2019). The radical plan to change how Harvard teaches economics. Vox, May 22 (https://www.vox.com/the-highlight/2019/5/14/18520783/harvard-economicschetty – Access Date: 09.10.2019).
  • Myerson, R. (2006). Fundamental Theory of Institutions: A Lecture in Honor of Leo Hurwicz. The University of Chicago (http://home.uchicago.edu/rmyerson/research/hurwicz.pdf – Access Date: 17.09.2019).
  • Myerson, R. (2010). Nash Equilibrium and the History of Economic Theory. Voprosy Economiki, (6), 26–43. (In Russian.)
  • North, D. (1997). Institutions, Institutional Change and Economic Performance. Moscow: Nachala Publ. (In Russian.)
  • North, D. (2010). Understanding the Process of Economic Change. Moscow: The Higher School of Economics Publishing House. (In Russian.)
  • Oleinik, A. N. (2007). Institutional Economics. Moscow: Infra-M Publ. (In Russian.)
  • Ostrom, E. (2010). Governing the Commons: The Evolution of Institutions for Collective Action. Moscow: IRISEN, Mysl Publ. (In Russian.)
  • Riker, W. (1992). The Entry of Game Theory into Political Science, pp. 207–223 / In: Weintraub, E. (Ed.) Toward a History of Game Theory. Duke University Press.
  • Schotter, A. (1981). Why Take a Game Theoretical Approach to Economics? Institutions, Economics and Game Theory. Discussion Paper Series, № 81–08.
  • Shastitko, A. E. (2006). Explanation of the Notion of Institutions in the Context of Game Theory. Journal Economicheskoi Theorii, (2), 5–18. (In Russian.)
  • Volchik, V. V. (2012). Institutional Changes: Towards a General Theory. Journal of Institutional Studies, 4 (4), 4–6. (In Russian.)
  • Volchik, V. V., Maslyukova, E. V. (2018). Narratives, Ideas and Institutions. Terra Economicus, 16 (2), 150–168. (In Russian.)
  • Witt, U. (1992). The Endogenous Public Choice Theorist. Public Choice, 73 (1), 117–129.
  • Yefimov, V. M. (2016). Economic Science in Question: Another Methodology, History and Research Practices. Moscow: Infra-M Publ. (In Russian.)
Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606