ECON 313 Lecture 3: Lecture 3, Institutions
30 Nov 2017
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Document Summary
The idea that institutions are an important aspect of economic development is far from new. Douglass north --> nobel prize in 1993 for his works. D. north"s definition: the humanly devised constraints that shape human interaction. In simple terms: the rules of the game. Facilitating cooperation between private actors to enhance the gains from. World bank, imf are not institutions (in an economics context), they are trade. Institution organisation organisations (the players of the game) Democracy vs dictatorship, presidential vs parliamentary, multi-party vs one-party. Free markets vs central planning (one actor deciding everything for the economy), labor regulation, private property rights vs communal property rights. Social norms, rules of religion, marriage, family. S thinks good is 10$ - he does not share this information. B bargains to a price of 20$ H (onest strategy) - take the money and give the good. D (ishonest strategy) - take the money and keep the good. H - give money, take the good.
