LIT 1 - Guala - Introduction (ESSENTIALS) Flashcards
GUALA: Institutions as rules: What is the core idea of this perspective?
The ‘rules account’ views institutions as rules that guide the actions of individuals in social interactions. These rules regulate behaviour, making certain actions appropriate or even mandatory in specific situations.
For example, think about the rule of private property. It tells us who has access to which resources. Or consider traffic laws; they dictate what actions (like stopping at a red light) are required in certain circumstances.
GUALA: Institutions as equilibria of strategic games: How does this approach define institutions?
The ‘equilibria approach’ understands institutions as behavioural patterns that persist because individuals have no reason to deviate from them unilaterally. This idea comes from the theory of strategic games, where an equilibrium is a situation where each person’s action is the best response to what everyone else is doing.
Imagine a simple game where two people can either cooperate or not. If they both cooperate, they both benefit a little. If one cooperates and the other doesn’t, the non-cooperator benefits a lot, and the cooperator loses. If neither cooperates, they both lose a little. A situation where both always cooperate can be an equilibrium if the benefits of mutual cooperation outweigh the risk of being the only one to cooperate.
GUALA: Rules-in-equilibrium: What is the main argument of this unified theory?
The ‘rules-in-equilibrium’ approach proposes that the ‘rules account’ and the ‘equilibria approach’ are not opposing views, but rather complementary ways of understanding institutions.
Think back to the traffic light example. The rule is ‘stop on red, go on green’. The reason people follow this rule (in Milan, for instance) is because they expect others to do the same.
