Abstract
We ask how normative statements are possible within an economic theory framework that recognises the importance of institutional arrangements. Instead of applying established outcome-oriented criteria of social welfare, we examine whether the rules of economic interaction allow the acquisition of gains from cooperation. We suggest to reconstruct any interaction as an existing or repealed social dilemma. This approach helps to identify common rule interests which create room for improvement of all parties involved, and to suggest desirable institutional reforms. Our policy applications include the unemployment problem and rural credit markets.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Adams, D. W. (1992). Taking a fresh look at informal finance. In D. Adams & D. A. Fitchett (Eds.), Informal finance in low-income countries (pp. 5–23). Boulder, San Francisco, Oxford: Westview Press.
Becker, G. S. (1976). The economic approach to human behavior. Chicago: Chicago University Press.
Bell, C. (1988). Credit markets and interlinked transactions. In H. Chenery & T. N. Srinivasan (Eds.), Handbook of development economics (Vol. I, pp. 763–830). Amsterdam: North Holland.
Binmore, K. (1994). Game theory and the social contract volume I: Playing fair. Cambridge: MIT Press.
Bowles, S. (2004). Microeconomics. Behavior, institutions, and evolution. New York: Russell Sage Foundation.
Brennan, G., & Buchanan, J. M. (1985). The reason of rules. Constitutional political economy. Cambridge: Cambridge University Press.
Buchanan, J. M. (1959). Positive economics, welfare economics, and political economy. Journal of Law and Economics, 2, 124–138.
Buchanan, J. M. (1975a). A contractarian paradigm for applying economic theory. American Economic Review, 65, 225–230.
Buchanan, J. M. (1975b). The limits of liberty. Between anarchy and leviathan. Chicago: University of Chicago Press.
Buchanan, J. M. (1987). Constitutional economics. In J. Eatwell, M. Milgate, & P. Newman (Eds.), The New Palgrave: A dictionary of economics (pp. 585–588). London: Macmillan.
Buchanan, J. M. (2004). The status of the Status Quo. Constitutional Political Economy, 15, 133–144.
Buchanan, J. M., & Tullock, G. (1962). The calculus of consent. Logical foundations of constitutional democracy. Ann Arbor: University of Michigan Press.
Coco, G. (2000). On the use of collateral. Journal of Economic Surveys, 14, 191–214.
de Meza, D., & Webb, D. (1987). Too much investment: A problem of asymmetric information. Quarterly Journal of Economics, 102, 281–292.
de Meza, D. & Webb, D. (2000). Does credit rationing imply insufficient lending? Journal of Public Economics, 78, 215–234.
Demsetz, H. (1969). Information and efficiency: Another viewpoint. Journal of Law and Economics, 12, 1–22.
Eggertsson, T. (1998). Limits to institutional reforms. Scandinavian Journal of Economics, 100, 335–357.
Fehr, E., & Schmidt, K. M. (1999). A theory of fairness, competition, and cooperation. Quarterly Journal of Economics, 114, 817–868.
Furubotn, E. G., & Richter, R. (2005). Institutions and economic theory. The contribution of the new institutional economics (2nd ed.). Ann Arbor: University of Michigan Press.
Ghatak, M., & Guinnane, T. W. (1999). The economics of lending with joint liability: Theory and practice. Journal of Development Economics, 60, 195–228.
Gravelle, H., & Rees, R. (1992). Microeconomics (2nd ed.). London: Longman.
Homann, K., & Suchanek, A. (2005). Ökonomik. Eine Einführung. 2. Auflage. Tübingen: Mohr Siebeck.
Inman, R. P. (1987). Markets, governments, and the “new” political economy. In A. J. Auerbach, & M. Feldstein (Eds.), Handbook of Public Economics (Vol. II, pp. 647–777). Amsterdam: North-Holland.
Krahnen, J. P., & Schmidt, R. H. (1994). Development finance as institution building. A new approach to poverty-oriented banking. Boulder: Westview Press.
Lindbeck, A., & Snower, D. J. (1988). The insider-outsider theory of employment and unemployment. Cambridge: MIT Press.
Lindbeck, A., & Snower, D. J. (2001). Insiders versus outsiders. Journal of Economic Perspectives, 15, 165–188.
Miller, G. J. (1992). Managerial dilemmas. The political economy of hierarchy. Cambridge: Cambridge University Press.
Nalebuff, B. (1998). Prisoners’ dilemma. In P. Newman (Ed.), The New Palgrave dictionary of economics and the law (pp. 89–95). London: Macmillan.
Ordeshook, P. C. (1986). Game theory and political theory. An introduction. Cambridge: Cambridge University Press.
Petrick, M. (2004). Credit rationing of Polish farm households: A theoretical and empirical analysis, Studies on the agricultural and food sector in Central and Eastern Europe (Vol. 26). Halle (Saale): Institute of Agricultural Development in Central and Eastern Europe. <http://www.iamo.de/dok/sr_vol26.pdf>.
Petrick, M. (2005). Governing structural change and externalities in agriculture: Toward a normative institutional economics of rural development. In K. M. Ortner (Ed.), Assessing rural development policies of the Common Agricultural Policy (pp. 85–104). Kiel: Vauk Wissenschaftsverlag.
Pies, I. (1996). A methodological interpretation of the Buchanan research program. Constitutional Political Economy, 7, 21–34.
Pies, I. (2000). Ordnungspolitik in der Demokratie. Ein ökonomischer Ansatz diskursiver Politikberatung. Tübingen: Mohr Siebeck.
Pies, I. (2001). Eucken und von Hayek im Vergleich. Zur Aktualisierung der ordnungspolitischen Konzeption. Tübingen: Mohr Siebeck.
Popper, K. R. (1967/1985). The rationality principle. In D. Miller (Ed.), Popper Selections (pp. 357–365). Princeton: Princeton University Press.
Rasmusen, E. (2001). Games and information. An introduction to game theory (3rd ed.). Malden: Blackwell Publishing.
Rawls, J. (1999). A theory of justice, Revised Edition. Oxford: Oxford University Press.
Schelling, T. C. (1960). The strategy of conflict. Cambridge: Harvard University Press.
Schelling, T. C. (1995/2006). What do economists know? In T. C. Schelling (Ed.), Strategies of commitment and other essays (pp. 151–159). Cambridge: Harvard University Press.
Snower, D. J. (1997). The simple economics of benefit transfers. In D. J. Snower, & G. de la Dehesa (Eds.), Unemployment policy: Government options for the labour market (pp. 163–198). Cambridge: Cambridge University Press.
Spermann, A. (1999). Fighting long-term unemployment with targeted employment subsidies: Benefit transfer programme (BTP) versus targeted negative income tax. Jahrbücher für Nationalökonomie und Statistik, 218, 647–657.
Stiglitz, J. E., & Weiss, A. (1981). Credit rationing in markets with imperfect information. American Economic Review, 71, 393–410.
Suchanek, A. (1994). Ökonomischer Ansatz und theoretische Integration. Tübingen: Mohr Siebeck.
Tullock, G. (1985). Adam Smith and the prisoners’ dilemma. Quarterly Journal of Economics, 100, 1073–1081.
Vanberg, V. J. (1994). Morality and economics – De moribus est disputandum. In V. J. Vanberg (Ed.), Rules and choice in economics (pp. 41–59). London: Routledge.
Williamson, O. E. (1996). The mechanisms of governance. New York: Oxford University Press.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Petrick, M., Pies, I. In search for rules that secure gains from cooperation: the heuristic value of social dilemmas for normative institutional economics. Eur J Law Econ 23, 251–271 (2007). https://doi.org/10.1007/s10657-007-9014-x
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10657-007-9014-x
Keywords
- Social dilemma
- Institutional economics
- Normative economics
- Policy advice
- Labour market
- Rural credit market