Institutional Analysis and Institutional Design Christoph Engel

The obvious is often not self-explanatory. We obviously interact with others in a meaningful way. This presupposes that we can predict reasonably well what another person is going to do, and how he is going to react to our own moves. Yet psychology demonstrates the almost unlimited plasticity of human behavioural dispositions. Why are we nonetheless able to interact successfully? This book claims that, to a substantial degree, it is because of institutions. To use a metaphor: wild animals have fur to survive hostile weather. Humans are left naked by nature. They must sew clothes for the purpose. Likewise, animals have instincts to make their behaviour predictable to their peers. Humans again are forced to take recourse in artefacts for the purpose. In both domains, the paucity of their natural endowment makes humans more needy. But they need not wear their fur when they move from Scotland to Sicily. Their less ready-made endowment thus makes for greater adaptability. The same holds for the mental endowment of humans. To a very high degree, it consists not of hard-wired solutions, but of the ability to find appropriate solutions in reaction to a permanently changing environment. But the Scots do wear furs (or modern equivalents). Likewise, humans often have to seek out mental clothing if they want to interact. This book purports to show that, and how, institutions provide humans with a rich wardrobe of mental clothes, all making them more predictable.