The Cognitive Basis Of Institutions A Synthesis Of Behavioral And Institutional Economics Shinji Teraji by Shinji Teraji 9780128120231, 0128120231 instant download after payment.

Societies display large differences in economic performance. The institu-
tional characteristics of societies underlie these differences. From a cognitive
viewpoint, this book asks: what are institutions and how do they evolve? The
book highlights some basic mechanisms of interaction between mental phe-
nomena and institutions. Understanding institutions is ultimately about
understanding how we think.
Institutions are a matter of the mind. The mind is not a completely exter-
nal object of analysis. Behavioral decision theory can enhance the analysis
of institutional features. Since institutions are composed of individuals who
are subject to heuristics and biases, institutions and their decision-making
rules can either magnify or mitigate the impact of heuristics and biases.
Furthermore, in an institutional position, its decision-making rules and proce-
dures may themselves lead to the emergence and reinforcement of heuristics
and biases. Institutional structures are complex: individual elements are inter-
dependent and self-organizing. Past experience is encapsulated in institu-
tional rules. By following rules, individuals reduce their uncertainty about
the possible outcomes that their social interactions can bring about.
Institutions then become uncertainty-reducing devices.