T                      is founded on two propositions: ) Institutions matter, ) Institutions are endogenous. The central claim of ‘‘new institutionalism’’ is that institutions are a ‘‘deeper’’, ‘‘primary’’ cause of economic development. The theoretical program has been laid out by North (, p. ; italics supplied): ‘‘To make sense out of historical and contemporary e...

In the 1990s Silicon Valley achieved iconic status for economic development planners globally. But how did Silicon Valley come into being? We demonstrate that its rise was a social process of bricolage in which actor’s fashioned solutions for various problems that they confronted with what they found at hand (Garud and Karnoe 2003 AQ1 ). Frequently, these solutions were adapted from existing fo...

The present paper intends to examine the four most important approaches to institutions as they now prevail in the economic literature. These are: the transaction-cost approach, the principal-agent approach, the equilibrium-of-thegame approach, and the evolutionary approach. Each approach will be succinctly presented and, in a second step, the question as to whether institutions can be ineffici...

The importance of adequately modeling credit risk has once again been highlighted in the recent financial crisis. Defaults tend to cluster around times of economic stress due to poor macro-economic conditions, but also by directly triggering each other through contagion. Although credit default swaps have radically altered the dynamics of contagion for more than a decade, models quantifying the...

Institutions as Game Theory Outcomes: Towards a Cognitive-Experimental Inquiry Angela Ambrosino University of Eastern Piedmont, Italy This paper investigates two different approaches to the analysis of institutions using game theory and discusses their methodological and theoretical implications for further research. Starting from von Neumann and Morgenstern’s theory, we investigate, how Schott...