Information about New Institutional Economics
New institutional economics (NIE) is an economic perspective that attempts to extend economics by focusing on the social and legal norms and rules that underly economic activity. Although NIE has its roots in Ronald Coase's fundamental insights about the critical role of institutional frameworks and transaction costs for economic performance, at present NIE analyses are built on a more complex set of methodological principles and criteria. They now depart from both mainstream Neoclassical economics and "old" institutional economics, though authors often care about both efficiency and distribution issues.
Among the many concepts/aspects that are often taken into account in current NIE analyses these can be mentioned: organizational arrangements, transaction costs, credible commitments, modes of governance, persuasive abilities, social norms, ideological values, decisive perceptions, gained control, enforcement mechanism, assets specificity, human assets, social capital, asymmetric information, strategic behavior, bounded rationality, opportunism, adverse selection, moral hazard, contractual safeguards, surrounding uncertainty, monitoring costs, incentives to collude, hierarchical structures, bargaining strength, etc.
Major scholars associated with this school include Ronald Coase, Douglass North, Oliver Williamson, Claude Menard and Thrainn Eggertsson, to mention but a few. In 1997 they founded the International Society for New Institutional Economics.
Organizations, by contrast, are those groups of people and the governance arrangements they create to coordinate their team action against other teams performing also as organizations. Firms, Universities, clubs, medical associations, unions, etc. are some examples.
Because some institutional frameworks are realities always "nested" inside other broader institutional frameworks, this clear demarcation is always blurred in actual situations. A case in point is a University. When the average quality of its teaching services must be evaluated, for example, an University may be approached as an organization with its people, physical capital, the general governing rules common to all that were passed by the University governing bodies, etc. However, if the task consists of evaluating people's performance in a specific teaching department, for example, along with their own made internal formal and informal rules, then the University as a whole enters the picture as an institution. General University rules, then, form part of the broader institutional framework influencing people's performance at the said teaching deparment. An ideology is an organized collection of ideas. The word ideology was coined by Count Antoine Destutt de Tracy in the late 18th century to define a "science of ideas.
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Among the many concepts/aspects that are often taken into account in current NIE analyses these can be mentioned: organizational arrangements, transaction costs, credible commitments, modes of governance, persuasive abilities, social norms, ideological values, decisive perceptions, gained control, enforcement mechanism, assets specificity, human assets, social capital, asymmetric information, strategic behavior, bounded rationality, opportunism, adverse selection, moral hazard, contractual safeguards, surrounding uncertainty, monitoring costs, incentives to collude, hierarchical structures, bargaining strength, etc.
Major scholars associated with this school include Ronald Coase, Douglass North, Oliver Williamson, Claude Menard and Thrainn Eggertsson, to mention but a few. In 1997 they founded the International Society for New Institutional Economics.
Institutional Levels
Although no single, universally accepted set of definitions has been developed, most scholars doing research under the NIE methodological principles and criteria follow Douglass North's demarcation between institutions and organizations. institutions are the "rules of the game", consisting of both the formal legal rules and the informal social norms that govern individual behavior and structure social interactions (institutional frameworks).Organizations, by contrast, are those groups of people and the governance arrangements they create to coordinate their team action against other teams performing also as organizations. Firms, Universities, clubs, medical associations, unions, etc. are some examples.
Because some institutional frameworks are realities always "nested" inside other broader institutional frameworks, this clear demarcation is always blurred in actual situations. A case in point is a University. When the average quality of its teaching services must be evaluated, for example, an University may be approached as an organization with its people, physical capital, the general governing rules common to all that were passed by the University governing bodies, etc. However, if the task consists of evaluating people's performance in a specific teaching department, for example, along with their own made internal formal and informal rules, then the University as a whole enters the picture as an institution. General University rules, then, form part of the broader institutional framework influencing people's performance at the said teaching deparment.
Further reading
- Eggertsson, T. (2005). "Imperfect Institutions. Opportunities and Limits of Reform". University of Michigan Press.
- Menard, Cl. (Ed.) (2004), "The International Library of the New Institutional Economics" (7 vols.). Edwar Elgar, Cheltenham.
- Menard C. and Shirley, M. (eds.) (2005). "Handbook of New Institutional Economics". Edwar Elgar, Cheltenham.
- North, Douglass C. (1993 working paper). "New Institutional Economics and Development".
- North, Douglass C. (1997). "Understanding Economic Change", in Transforming Post-Communist Political Economies, Joan M. Nelson, Charles Tilly and Lee Walker, eds., Washington D. C.: National Academy Press. pp. 13-18.
- North, D.C. (2005). "Understanding the Process of Institutional Change". Princeton University Press.
- Toboso, F. (2001). "Institutional Individualism and Institutional Change: the Search For a Middle Way Mode of Explanation", Cambridge Journal of Economics, vol. 25, n.6, November, pp. 765-784.
- Toboso, F. and Arias, X.C. (eds.) (2006). "Organizing Governments and Markets. Some Case Studies from a NIE Perpective". PUV-Universitat de València, (Edited jointly with the Universidad de Vigo). (In Spanish)
- Oliver E. Williamson (September, 2000). "The New Institutional Economics: Taking Stock, Looking Ahead" Journal of Economic Literature, vol. 38, pp. 595-613.
External links
- Introduction to new institutional economics
- ISNIE - International Society for New Institutional Economics.
- ESNIE - European School on New Institutional Economics.
- Introductory Reading List in New Institutional Economics - The Ronald Coase Institute
- IRIS Center - Founded by Mancur Olson, University of Maryland.
- Contracting and Organizations Research CenterUniversity of Missouri
- Economics and Institutions WEBSITE - by prof. F. Toboso, University of Valencia, Spain.
Sociology (from Latin: socitus, "companion"; and the suffix -ology, "the study of", from Greek λόγος, lógos, "knowledge") is the systematic and scientific study of society and societal behavior.
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LAW may refer to:
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- Lightweight Anti-tank Weapon, like the M72 LAW (US Army) and the LAW 80 (British Army)
- Palestinian Society for the Protection of Human Rights (also known as LAW)
- League of American Bicyclists, formerly known as the League of American Wheelmen
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Norm may mean:
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- Norm (artificial intelligence)
- Norm (philosophy)
- Norm (sociology)
- Normative
- The diminutive of the proper name, "Norman"
- Grandmaster norm, a chess result required to qualify for an official title (also IM norm, WGM norm, etc.
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Ronald Harry Coase (b. December 29, 1910) is a British economist and the Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law School. After studying with the University of London External Programme in 1927-29, Coase entered the London School of
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In economics and related disciplines, a transaction cost is a cost incurred in making an economic exchange. For example, most people, when buying or selling a stock, must pay a commission to their broker; that commission is a transaction cost of doing the stock deal.
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Institutional economics, known by some as Institutional political economy, focuses on understanding the role of human-made institutions in shaping economic behavior. Aspects of institutional economics are part of mainstream economics -- in particular the so-called new institutional
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In economics and contract theory, an information asymmetry is present when one party to a transaction has more or better information than the other party. (This is also called a state of asymmetric information).
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Ronald Harry Coase (b. December 29, 1910) is a British economist and the Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law School. After studying with the University of London External Programme in 1927-29, Coase entered the London School of
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Douglass C. North
Born November 5 1920
Cambridge, Massachusetts
Residence U.S.
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Born November 5 1920
Cambridge, Massachusetts
Residence U.S.
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Oliver Eaton Williamson (born September 27, 1932) is a prominent author in the area of transaction cost economics, a student of Ronald Coase, Herbert Simon and Richard Cyert. Prof.
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20th century - 21st century
1960s 1970s 1980s - 1990s - 2000s 2010s 2020s
1994 1995 1996 - 1997 - 1998 1999 2000
Year 1997 (MCMXCVII
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1960s 1970s 1980s - 1990s - 2000s 2010s 2020s
1994 1995 1996 - 1997 - 1998 1999 2000
Year 1997 (MCMXCVII
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Douglass C. North
Born November 5 1920
Cambridge, Massachusetts
Residence U.S.
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Born November 5 1920
Cambridge, Massachusetts
Residence U.S.
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Institutions are structures and mechanisms of social order and cooperation governing the behavior of two or more individuals. Institutions are identified with a social purpose and permanence, transcending individual human lives and intentions, and with the making and enforcing of
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An organization (or organisation — see spelling differences) is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment.
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