Summary: Institutional Economics And Economic Organizations

Read the summary and the most important questions on Institutional economics and economic organizations

• Theme 1: introduction

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• What are institutions according to Douglas North?

  Institutions are the rules of the game. Institutions are the humanly devised constraints that shape human interaction. They are made up of formal constraints (such as rules, laws, constitutions) and informal constraints (such as norms of behaviour, conventions, self-imposed codes of conduct)

• What are two types of institutions and what do they consist?

  1. Formal institutions (legally enforced): public; laws and constitutions and private; contractual rules 
     
  2. Informal institutions (socially enforced); consists out of traditions, customs, norms and codes of conduct 

• Give two examples of institutions.

  1. Marriage; formal and informal institutions, there is a contract but there is also a lot of symbolism and traditions that are related to marriage 
     
  2. Shaking to an agreement and signing a contract is informal and formal 

• What are institutions according to Groenewegen?

  Institutions are rules that facilitate transactions

• What are the three theoretical lenses in the field of Institutional economics and Economic organization theory?

  1. Transaction cost economics 
     
  2. Agency theory
  3. Property rights theory 

• What are ceremonial values? Name three characteristics

  1. Traditions, rituals and myths. 
  2. For instance, sexist beliefs can be traced back to the bible (Eve was created from Adam's rib / a woman has to take care of her husband) 
  3. The power/societal position of royals   

• What are instrumental values? Name two characteristics

  1. Functional, to solve problems, new realities create the need for new skills and knowledge 
     
  2. For instance, the industrial revolution made that women started working in factories 

• What is opportunistic behaviour?

  ''Self-interest seeking with guile'', trying to gain economic benefits by using deceit, or by withholding information, or by making use of loopholes in a deal or contract

• What are three examples of opportunistic behaviour?

  1. Shirking on the job = not putting in all the effort that you can because you know that the boss is not watching 
     
  2. Making a deal to produce table tops for a business partner but using inferior quality wood because the quality of the wood was not specified in the contract
  3. Selling boxes of apples but putting the best looking apples on top and the bruised apples on the bottom to deceive buyers. 

• What is site specificity?

  Chickens cannot be transported over long distances so chicken farms will be located nearby slaughterhouses