On defining institutions: rulesversusequilibria

Abstract

In their stimulating paper, Hindriks and Guala (2014) bridge the prominent alternative conceptions of institutions-as-rules and institutions-as-equilibria, by proposing a ‘rules in equilibrium’ interpretation. This comment argues that the task ofdefininginstitutions as a class of phenomena is different from the tasks ofunderstandingoranalysingthem. Definitions are classification devices and are typically ill-based on behavioural outcomes such as equilibria. Accepting the useful insights of the Hindriks and Guala (2014) article, attention to the matter of definition reinstates a rules-based approach, notwithstanding the importance of understanding and analysing equilibria. The comment establishes a broad definition of institutions as systems of rules, which includes organizations. Finally this comment raised some of the problems involved in understanding the nature of institutional rules.

Understanding the role of values in institutional change: the case of the energy transition

“…The most accepted and shared definition of institutions focuses on institutions as "rules of the game" and systems of rules which enable and constrain actor behavior [3,72] (see the "A dynamic framework for institutional change" section). Rules in the IAD framework are prescriptions which define whether actions are required, prohibited, or permitted.…”

Money as an Institution: Rule versus Evolved Practice? Analysis of Multiple Currencies in Argentina

“…Despite some variation among authors, a first strand that sees institutions as rules that come out of purposeful design. Kingston and Caballero (2009) refer to this view as the "centralized" or "designed" version, while Hodgson (2015) and Greif and Kingston (2011) refer to "institutions as rules" and Brousseau et al (2011) use the label of "constraining rules". In this strand, motivated agents express their preferences and negotiate, and exert pressure to push or block institutional changes according to their interests and benefit.…”

“…In turn, Brousseau et al (2011) focus on different temporal dimensions: institutions as rules concern the shorter term in which political negotiation and agreements are possible with a top-down approach, while the self-enforcing or equilibria account of institutions deals with the long term implied in social evolution and bottom-up approaches. In the meantime, Hodgson (2015) argues that rules include norms of behaviour and social conventions as dispositions to act in a certain way but with no certainty that behaviour will effectively and invariably follow. Effective behaviour is secondary to the existence of institutions, which are mainly a disposition to act.…”

Introduction to the Douglass C. North memorial issue

“…Even if mechanisms for reaching and acting on decisions are prevalent, the treatment of an organization as a social actor should not ignore the potential conflict within the organization. Abstraction and definition are entirely different analytical procedures (Hodgson, 2015b(Hodgson, , 2016a. When mathematicians calculate the trajectory of a space vehicle or satellite, they often treat it as a singular particle.…”