ECON 388 Beyond Markets: Institutions and Human Interests (Not offered 1999-2000)
The economics of institutions is concerned with the humanly-devised rules of a society that structure incentives and constrain and shape human interactions. In contrast to much of economics, which is concerned with a single, exogenous institution (the market), institutional economics seeks to understand broadly the rationale for, and evolution of, a range of institutional structures including private and common property, firms, governments, customs and cultural norms, ethics and morals. In this course, we will examine the recently burgeoning field of institutional economics, the influence of which is indicated by three recent Nobel Prizes to institutionalists-R. Coase, G. Becker, and D. North. The "new institutional economics" stresses the importance of integrating individual choices within the constraints imposed on choice sets by institutions at all levels. Linkages among institutions are important as well; indeed, market efficiency depends to a large extent on the existence and effectiveness of other institutions. We will also examine their dynamics-how institutions may arise and evolve in response to problems of limited information, transaction costs, bounded rationality, and other social coordination problems. The course will stress the implications of this dynamic, institutional perspective on individual and collective human interests, as well as on the role of public policy. Requirements: midterm and final exams. Prerequisite: Economics 251. Enrollment limited to 20. This course satisfies the Economics Department's alternative paradigms requirement.