Markets are one of the most salient institutions produced by humans, and economists have traditionally analyzed the workings of the market mechanism. Recently, however, economists and others have begun to appreciate the many institution-related events and phenomena that have a significant impact on economic performance. Examples include the demise of the communist states, the emergence of Silicon Valley and e-commerce, the European currency unification, and the East Asian financial crises. In this book Masahiko Aoki uses modern game theory to develop a conceptual and analytical framework for understanding issues related to economic institutions. The wide-ranging discussion considers how institutions evolve, why their overall arrangements are robust and diverse across economies, and why they do or do not change in response to environmental factors such as technological progress, global market integration, and demographic change.
Author(s): Masahiko Aoki
Series: Comparative institutional analysis 2
Edition: 1st
Publisher: MIT Press
Year: 2001
Language: English
Pages: 482
City: Cambridge, Mass
Acknowledgments......Page 10
1 What Are Institutions? How Should We Approach Them?......Page 16
1.1 Three Views of Institutions in Game-Theoretic Perspective......Page 19
1.2 Aspects of Institutions: Shared Beliefs, Summary Representations of Equilibrium, and Endogenous Rules of the Game......Page 25
1.3 Organization of the Book......Page 36
I PROTO-INSTITUTIONS: INTRODUCING BASIC TYPES......Page 46
2.1 Customary Property Rights as a Self-organizing System......Page 50
2.2 Community Norms as a Self-enforcing Solution to the Commons Problem......Page 58
Appendix: History versus Ecology as a Determinant of a Norm: The Case of Yi Korea......Page 70
3 The Private-Order Governance of Trade, Contracts, and Markets......Page 74
3.1 Traders’ Norms......Page 77
3.2 Cultural Beliefs and Self-enforcing Employment Contracts......Page 83
3.3 Private Third-Party Governance: The Law Merchant......Page 88
3.4 Moral Codes......Page 91
3.5 The Overall Arrangement of Market Governance......Page 93
Appendix 3.1 Money as an Evolutive Convention......Page 106
4 Organizational Architecture and Governance......Page 110
4.1 Organizational Building Blocks: Hierarchical Decomposition, Information Assimilation, and Encapsulation......Page 113
4.2 Types of Organizational Architecture......Page 121
4.3 Governance of Organizational Architecture: A Preliminary Discussion......Page 133
5 The Co-evolution of Organizational Conventions and Human Asset Types......Page 144
5.1 Types of Mental Programs: Individuated versus Context-Oriented Human Assets......Page 146
5.2 The Evolutionary Dynamics of Organizational Conventions......Page 150
5.3 The Interactions of Organizational Fields and Gains from Diversity......Page 155
5.4 The Relevance and Limits of the Evolutionary Game Model......Page 162
6 States as Stable Equilibria in the Polity Domain......Page 166
6.1 Three Prototypes of the State......Page 168
6.2 Various Forms of the Democratic and Collusive States......Page 175
II A GAME-THEORETIC FRAMEWORK FOR INSTITUTIONAL ANALYSIS......Page 196
7 A Game-Theoretic Concept of Institutions......Page 200
7.1 Exogenous Rules of the Game and Endogenous Action-Choice Rules......Page 201
7.2 The Institution as a Summary Representation of an Equilibrium Path......Page 212
7.3 Feedback Loops of Institutionalization......Page 217
8 The Synchronic Structure of Institutional Linkage......Page 222
8.1 Social Embeddedness......Page 223
8.2 Linked Games and Institutionalized Linkages......Page 228
8.3 Institutional Complementarity......Page 240
9 Subjective Game Models and the Mechanism of Institutional Change......Page 246
9.1 Why Are Overall Institutional Arrangements Enduring?......Page 248
9.2 Subjective Game Models and General Cognitive Equilibrium......Page 250
9.3 The Mechanism of Institutional Change: The Cognitive Aspect......Page 254
10 The Diachronic Linkages of Institutions......Page 260
10.1 Overlapping Social Embeddedness......Page 262
10.2 The Reconfiguration of Bundling......Page 275
10.3 Diachronic Institutional Complementarity......Page 282
III AN ANALYSIS OF INSTITUTIONAL DIVERSITY......Page 290
11 Comparative Corporate Governance......Page 294
11.1 Governance of the Functional Hierarchy......Page 297
11.2 Codetermination in the Participatory Hierarchy......Page 302
11.3 The Relational-Contingent Governance of the Horizontal Hierarchy......Page 306
12 Types of Relational Financing and the Value of Tacit Knowledge......Page 322
12.1 A Generic Definition of Relational Financing and Its Knowledge-Based Taxonomy......Page 325
12.2 The Institutional Viability of Relational Financing......Page 329
13 Institutional Complementarities, Co-emergence, and Crisis: The Case of the Japanese Main Bank System......Page 344
13.1 The Main Bank System as a System of Shared Beliefs......Page 346
13.2 Institutional Emergence: Unintended Fits......Page 348
13.3 Endogenous Inertia, Misfits with Changing Environments, and a Crisis of Shared Belief......Page 355
14 Institutional Innovation of the Silicon Valley Model in the Product System Development......Page 362
14.1 The Information-Systemic Architecture of the Silicon Valley Model......Page 364
14.2 The VC Governance of Innovation by Tournament......Page 375
14.3 Norms and Values in the Silicon Valley Model......Page 381
Appendix: The Stylized Factual Background for Modeling......Page 386
15.1 Some Stylized Models of Overall Institutional Arrangements......Page 392
15.2 Self-organizing Diversity in the Global Institutional Arrangement......Page 401
Notes......Page 410
References......Page 448
Index......Page 472
