Taking inspiration from the work of Douglass North, much institutional research attempts a distinction between ‘formal’ and ‘informal’ institutions. North often associated ‘formal institutions’ with rules enforced through a legal system. It is suggested here that this lead should be followed and refined. In which case ‘legal system’ and ‘law’ require definitions. An alternative claim, that ‘formal’ basically means ‘written down’, is arguably less useful. Stressing the importance of clear definitions in this area, this paper considers a case where slight modifications yield strikingly different results. Some options concerning the meanings of ‘culture’ and their relation to institutions are briefly noted. Changes in, and interactions between, ‘formal’ and ‘informal’ institutions are considered, with illustrative examples. Contrary to some authors, informal institutions can sometimes change rapidly, in some cases in response to state legislation.

National innovation systems (NISs) have been important in the literature since the 1990s for highlighting the institutional performance of economies and promoting economic development. Inclusion in systemic innovation activities is an emerging area of research. However, the definition of inclusion within innovative activities remains unclear and is associated with numerous forms and characteristics depending on the context visited. Our work highlights the conceptual gap that exists around the notion of inclusive innovation by characterising three forms of inclusion in relation to innovation activities. We thus set out, in the form of a typology, three distinct framings which enable us to identify three different levels associated with specific institutional mechanisms and forms of inclusion. This typology makes it possible to identify appropriate innovation policies, depending on how inclusive innovation is characterised (low, medium, and high). It also helps to clarify the inclusive nature of innovation in NIS approaches.

This paper examines the effects of state capacity on the reported Covid-19 infection (and mortality) rate and its policy implications. We analyse two dimensions of state capacity which were critical during the pandemic. The healthcare capacity acted to contain the virus outbreak (an effect we call containment). The information capacity acted to detect contagious yet asymptomatic cases (an effect we call detection). We argue that containment pushes down the reported infection rate. In contrast, detection pushes it up, thus generating a non-linear combined effect that we estimate systematically using Colombian municipality-level as well as country-level data, different data sources, and various empirical strategies. Our findings indicate that the infection (and mortality) rates were likely under-reported, especially in areas with a low state capacity level, due to their poor capabilities to detect the virus. Our study put the emphasis on the many facets of state capacity, each affecting in complex ways our understanding of important phenomena, such as the Covid-19 outbreak.

This paper derives career lessons for economists by examining the unusual career of Brian J. Loasby in terms of Loasby’s own key ideas. Loasby’s early career ran into difficulties after he chose to become a postgraduate for lifestyle rather than career reasons, with his insufficiently ambitious reference standards resulting in unduly narrow search for both options and new connections. His eventual success came because of a path-dependent process whereby he developed an organizing framework that was conducive to finding problems and making intellectual connections. It was a process in which making personal connections also had a key role, though some intellectual connections that he earlier failed to make resulted from trusting other people. In the market for contributions to knowledge, his way of branding and positioning his work in relation to management decision-making and the growth of knowledge gave it a wider appeal than would have been the case if he had aligned himself with a particular school of thought or ‘heterodox economics’ in general.

This paper examines the concept of decentralised autonomous organisations (DAOs), blockchain-based entities intended to operate without central authority or management hierarchy, through the lens of organisational economics. It compares DAOs with conventional organisational forms and explores whether DAOs represent a novel organisational form. The paper investigates DAOs in the context of the electronic markets hypothesis and applies theories from Demsetz, Jensen and Meckling, and Williamson to understand their potential long-term viability. A key finding is that for DAOs to function as claimed, they must effectively suppress agency costs through smart contracts and internal contestable markets. The paper also highlights the challenges DAOs face in maintaining adaptive integrity and fostering cooperative adaptation. While DAOs show promise in reducing certain transaction and information costs, their long-term viability depends on overcoming significant governance and participation hurdles.

Crises constitute a fascinating context in which to investigate the resilience of institutional arrangements, or their breakdown and change, and to shed light on the interplay between formal and informal institutions in this process. The papers in this symposium focus on crises from political power grab to economic shock and natural disasters. They focus on the differing impact of different crises or investigate the specific impact of one form of crises on formal and informal institutions or the negotiation process that allow them to coexist. Bringing them under one roof emphasises the diversity of lenses through which institutions can be conceptualised and operationalised. It also highlights some of the issues preventing meaningful comparisons across frameworks. Importantly, it also allows us to trace an agenda for research towards improving our understanding of when and how crises lead to change. We argue that an often under-studied aspect that could help to move towards a clearer taxonomy is to articulate more explicitly the agency of actors and the distribution of power within society and social groups.

Marginal utility (MU) theories of consumer demand assume that consumers try to maximise a generic benefit (‘utility’) by selecting purchases giving equal MU per unit of cost, from which are predicted the observed relationships between price changes and quantities of demanded consumer goods. Attempts to remedy the explanatory shortcomings of MU theory usually supplement it with additional assumptions. This paper proposes taking that approach to its logical conclusion by using consumer and psychological research findings not to supplement but to replace the concept of utility entirely with realistic explanations of consumer behaviour.

We propose a framework for institutional change in the ‘rules-in-equilibrium’ tradition and introduce the term institutional incompleteness. Institutions are incomplete when their constituent rules fail to induce behavioural beliefs about the strategies of others and hence fail to achieve an equilibrium. Even with deliberate preparation ex-ante, there will always be unanticipated situations not covered by the rules that can only be settled ex-post, especially in a complex and changing environment. At this crux, people creatively invoke focal point generating ideas. Ideas act as guides for coordination where rules cannot. If no focal points can form, further institutional collapse occurs. To understand which ideas guide better, economists will have to investigate an idea’s content. Our theory offers a way to look at institutional change due to incompleteness while also allowing the requisite room for ideas in explaining the patterned yet indeterminate trajectory of humanity.

This paper addresses the conceptual gap between the expected benefits of federalism in managing ethnicity-based conflict and its actual governance outcomes in the African context. One of the main reasons for this gap is the conflation of federalism with decentralization. In response, we develop and configure polycentric federalism as a praxis-oriented framework with three institutional parameters, administrative devolution, peaceful competition among governance units, and individual choice of alternating governance structures. Through this framework, we analyse federal institutional design in Nigeria and Ethiopia to illustrate why federalism fails to effectively manage ethnicity-based conflict in African states. Despite the varying approaches to federalism in the two cases, institutional design falls far short of achieving the parameters of polycentric federalism, a necessary condition for effectively managing diversity through federalism. Beyond the policy implications, our analysis contributes to institutional economics by illustrating how federal institutional design affects identity-based group dynamics in conflict-ridden multiethnic polities.