An Essay in Modeling of Institutional Change

Leonid Hurwicz

Chapter Chapter 1 in The Socio-Economic Transformation, 2007, pp 3-15 from Palgrave Macmillan

Abstract: Abstract Economic analysis carried out with the help of models has been suffering from a lack of expression of institutional settings. Yet institutional change is at the heart of numerous transition processes around the globe. This chapter illustrates a way of modelling institutional arrangements through the game theoretic framework, involving utility functions and game-forms. Illustrative analysis is provided for a well-defined classical case of land tenure institutions. Then, the chapter gives an analysis of a broader domain involving law-making, its effectiveness and enforcement. The chapter implies that the limits to market mechanisms ought to be taken into account when designing the institutional frameworks for the transition societies and economies.

Keywords: Nash Equilibrium; Payoff Function; Institutional Change; Institutional Arrangement; Outcome Function (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-37903-9_1

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DOI: 10.1057/9780230379039_1

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