Skip to main content
×
Home
    • Aa
    • Aa

Linking institutions to economic performance: the role of macro-structures in micro-explanations

  • CYRIL HÉDOIN (a1)
Abstract:
Abstract:

Economists have been investigating the link between institutions and economic performance for several years. While econometric studies of this link have flourished, they are of limited use in understanding the causal mechanisms making some institutions responsible for economic performance. Several works using game theory and akin to the ‘new institutional economics’ have entertained the goal of developing micro-explanations of the institutions–performance link. Because game theory focuses on individuals’ actions and beliefs, game-theoretic studies of institutions are thought to oppose more ‘structuralist’ explanations that downplay the role of individual agents and put more emphasis on the importance of social (or ‘macro’) structures. This paper demonstrates that this claim is misconceived, as the micro-explanations produced by game-theoretic models must assume already existing macro-structures. Institutions produce downward effects, shaping each agent's action. Moreover, in a game-theoretic framework, macro-structures are constitutive of individual agency since, without them, agents would often be unable to choose. I illustrate this claim with the example of Avner Greif's study of the role of cultural beliefs in the economic organisation of medieval societies.

Copyright
Corresponding author
*Email: cyril.hedoin@univ-reims.fr
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

P. Abell , T. Felin , and N. J. Foss (2010), ‘Causal and Constitutive Relations and the Squaring of Coleman's Diagram: Reply to Vromen’, Erkenntnis, 73 (3): 385391.

B. Amable (2003), The Diversity of Modern Capitalism, Oxford: Oxford University Press.

R. J. Aumann (1976), ‘Agreeing to Disagree’, Annals of Statistics, 4 (6): 12361239.

R. J. Aumann (1987), ‘Correlated Equilibrium and an Expression of Bayesian Rationality’, Econometrica, 55 (1): 118.

K. Binmore (2008), ‘Do Conventions Need to Be Common Knowledge?’, Topoi, 27: 1727.

G. Clark (2007), ‘Review of Avner Greif's Institutions and the Path to the Modern Economy: Lessons from Medieval Trade’, Journal of Economic Literature, 45 (3): 725741.

C. F. Craver and W. Bechtel (2007), ‘Top-Down Causation Without Top-Down Causes’, Biology and Philosophy, 22 (4): 547563.

A. J. Field (1981), ‘The Problem with Neoclassical Institutional Economics’, Explorations in Economic History, 18: 174198.

A. J. Field (1984), ‘Microeconomics, Norms, and Rationality’, Economic Development and Cultural Change, 32 (4): 683711.

E. Glaeser , R. La Porta, F. Lopez-De-Silanes , and A. Shleifer (2004), ‘Do Institutions Cause Growth?’, Journal of Economic Growth, 9 (3): 271303.

M. Granovetter (1985), ‘Economic Action and Social Structure: The Problem of Embeddedness’, American Journal of Sociology, 91 (3): 418510.

A. Greif (1994), ‘Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies’, Journal of Political Economy, 102 (5): 912950.

G. M. Hodgson (2006), ‘What are Institutions?’, Journal of Economic Issues, 40 (1): 225.

G. M. Hodgson (2007), ‘Meanings of Methodological Individualism’, Journal of Economic Methodology, 14 (2): 211226.

R. Jepperson and J. W. Meyer (2011), ‘Multiple Levels of Analysis and the Limitations of Methodological Individualisms’, Sociological Theory, 29 (1): 5473.

D. Lewis (1969), Conventions. A Philosophical Study, Oxford: Wiley-Blackwell.

C. Paternotte (2010), ‘Being Realistic about Common Knowledge: A Lewisian Approach’, Synthese, 183 (2): 249276.

P. Vanderschraaf (1998), ‘Knowledge, Equilibrium and Convention’, Erkenntnis, 49 (3): 337369.

J. Vromen (2010), ‘MICRO-Foundations in Strategic Management: Squaring Coleman's Diagram’, Erkenntnis, 73 (3): 365383.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Full text views

Total number of HTML views: 2
Total number of PDF views: 31 *
Loading metrics...

Abstract views

Total abstract views: 99 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 20th September 2017. This data will be updated every 24 hours.