This article aims to address the lack of transaction costs economics (TCE) studies in health economics. It provides a content analysis of ObamaCare and 25 lawsuits that challenge the 2010 reform. It shows that the cultural environment determines the strength of features of governance structures and in line with this the strength of their instruments. Following Williamson's TCE model of governance structures, the zero transaction costs criterion is supplanted by the remediableness criterion. Assuming that ObamaCare might be ruled to be constitutional, the regulation of healthcare is found to be a comparative efficient governance structure in addressing adverse selection. However, the TCE analysis also reveals that ObamaCare itself is subject to some flaws in efficiency and effectiveness, namely: unbalanced adaptation mechanisms, unbalanced incentives and weak enforcement devices.

This paper analyzes the relation of culture, institutions and economic development using the example of Indonesia. The success of economic catch-up development depends essentially on the interconnection between pre-existing informal constraints on the one hand and novel, imported institutions on the other. Hence culture, understood as the interplay between legal rules and non-legal constraints, has to be considered as an important determinant of economic development and growth. In order to adapt economic policies and thereby prevent institutional traps, which may otherwise hinder economic reforms, it is essential to understand culture and the ways in which different cultural factors support or constrain the functioning of formal institutional settings. Applying a cultural approach to economics in the case of Indonesia's economic development allows for the inclusion of complex cultural conditionality of economic behavior and puts special emphasis on the role of politicians as public and cultural entrepreneurs. Altogether, the example of Indonesia demonstrates once more the necessity to apply a cultural approach to the study of catch-up development in a globalized world.

The problem of institutional transplantation is an important issue. In Jeremy Bentham's work, we find practical as well as theoretical proposals regarding this problem. Here, we view his work as an invitation to reflect on the overall nature of the question of institutional design and transplantation. The transfer of institutions requires knowledge of ‘place and time’ that will allow for an accommodation of the transferred institutions to their new soil. However, an awareness of this type of knowledge and thus relying on its actually being available is not viable from a practical point of view. This is due to the fact that the core of informal institutions is tacit, which imposes a fundamental constraint on the process of institutional transplantation; informal norms must co-exist with formal rules, and such merging requires some accommodation of both types of rules.

A growing body of evidence documents a vast array of economic and social ill-effects of public perceived corruption. These findings and the scant evidence of recent success in the fight against corruption beg the question: how to abate it? We document the existence of a negative, statistically significant and quantitatively large impact of economic freedom (our proxy for institutions of capitalism, markets and competition) on public corruption. This negative response of corruption to economic freedom holds after allowing for non-linearities interacting economic freedom and political rights, endowments, legal families, ethnicity and for robust determinants of corruption uncovered by Daniel Treisman [‘What Have We Learned About the Causes of Corruption From Ten Years of Cross-National Empirical Research?’, Annual Review of Political Science, 10: 211–244], such as income, democracy, freedom of the press and fuel exports. Thus, this paper helps to explain why high-income prosperous countries exhibit low levels of public perceived corruption, and why honesty is a normal good.

In this paper I consider the implications of work in evolutionary psychology for institutional analysis. I respond to Pascal Boyer and Michael Bang Petersen (‘The Naturalness of (Many) Social Institutions: Evolved Cognition as their Foundation’; 2012), who put forward a programmatic statement in this connection. I argue that their discussion overstates the explanatory power of evolutionary psychology and does not take sufficient account of what we already know about institutions. At the same time, I suggest that they, and the empirical work upon which they draw, make an important contribution by helping us to establish more clearly the boundary conditions of institutional analysis. I call for ongoing cooperation and for the establishment of a unified research tradition that brings together both evolutionary psychology and institutionalism.