On the emergence of organic economic institutions and the impact of legal rules.

Abstract

Unplanned institutions appear to play an important role in economic activity but we lack a good understanding of how they emerge. Also, can legal rules enable the endogenous emergence of these types of institution, i.e., can they be planned? This seems paradoxical but we find that it is possible. These issues are important because collective behaviour, of which institutions are one type, can be viewed as the other side of the coin to competitive behaviour in economies; however, far fewer research resources have been devoted to the former than the latter over the past two centuries. The approach taken in this thesis is to apply the recent advances in Complexity Economics and Agent-Based Computational Economics to the questions of unplanned institutional emergence and the potential role of legal rules. More specifically, agent-based models are developed that approximate the ontology of complex economic systems (the resulting gap between theory and models is much narrower than equivalent work in game theory). These models are then used to explore unplanned institutional emergence and the impact of legal rules. The resulting simulations show that unplanned institutions can emerge from co-adaptive reinforcement learning and that habits subsequently form. However, the environment has to be sufficiently enabling of such emergence. Legal rules can be used to foster an enabling environment when institutions do not emerge endogenously but any corruption must first be overcome. The ultimate aim of this thesis is to improve our understanding of unplanned institutional emergence (and the role of legal rules) in order to help foster solutions to real-world institutional problems.

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ORCID for Gregory James Fisher: orcid.org/0009-0009-0522-5587

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