Introduction to A Research Agenda for New Institutional Economics

Claude Menard and Mary M. Shirley ()
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Mary M. Shirley: RCI - Ronald Coase Institute - Ronald Coase Institute

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: When New Institutional Economics (NIE) first appeared on the scholarly scene in the early 1970s, it was a transformative movement. NIE aimed to radically alter orthodox economics by showing that institutions are multidimensional and matter in significant ways that can be statistically measured and systematically modeled. In the decades since, thousands of articles and books have pursued this premise and NIE has evolved from an upstart movement to a major influence on researchers in economics, political science, law, management, and sociology. What made New Institutional Economics a radical idea was that it abandoned: [. . .]the standard neoclassical assumptions that individuals have perfect information and unbounded rationality and that transactions are costless and instantaneous. NIE assumes instead that individuals have incomplete information and limited mental capacity and because of this they face uncertainty about unforeseen events and outcomes and incur transaction costs to acquire information. To reduce risk and transaction costs humans create institutions, writing and enforcing constitutions, laws, contracts and regulations – so-called formal institutions – and structuring and inculcating norms of conduct, beliefs and habits of thought and behavior – or informal institutions.

Date: 2018-12-28
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Published in Claude Ménard; Mary M. Shirley. A Research Agenda for New Institutional Economics, Edward Elgar Publishing, 1-6 p., 2018, Elgar Research Agendas, 978 1 78811 250 5. ⟨10.4337/9781788112512.00006⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-04011115

DOI: 10.4337/9781788112512.00006

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