An Agent-Based Model of Institutional Life-Cycles

Manuel Wäckerle, Bernhard Rengs and Wolfgang Radax
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Manuel Wäckerle: Institute for Ecological Economics, Department Socioeconomics, Vienna University of Economics and Business, Welthandelsplatz 1/D4/2nd Floor/D4.2.232, 1020 Wien, Austria

Games, 2014, vol. 5, issue 3, 1-28

Abstract: We use an agent-based model to investigate the interdependent dynamics between individual agency and emergent socioeconomic structure, leading to institutional change in a generic way. Our model simulates the emergence and exit of institutional units, understood as generic governed social structures. We show how endogenized trust and exogenously given leader authority influences institutional change, i.e. , diversity in institutional life-cycles. It turns out that these governed institutions (de)structure in cyclical patterns dependent on the overall evolution of trust in the artificial society, while at the same time, influencing this evolution by supporting social learning. Simulation results indicate three scenarios of institutional life-cycles. Institutions may, (1) build up very fast and freeze the artificial society in a stable but fearful pattern (ordered system); (2) exist only for a short time, leading to a very trusty society (highly fluctuating system); and (3) structure in cyclical patterns over time and support social learning due to cumulative causation of societal trust (complex system).

Keywords: institutional economics; institutional life-cycles; agency-structure dynamics; iterated prisoners dilemma; agent-based modeling; applied game theory; evolutionary political economy; complexity (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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