Williamson's legacy will be permanently, and deservedly, linked with the theory of the firm. As important, however, is his contribution to our understanding of contracting. My aim here is to describe Williamson's conception of contracting, how it differs from other approaches to contracting, and some implications of that approach for contract design and enforcement. I argue that Williamson's ‘process orientation’ – in which the main dimension along which contracts vary is the extent to which contract adjustments are effected through court ordering versus private ordering – provides alternative interpretations of some conventional contract terms but also sheds light on some otherwise puzzling contractual phenomena.

This is a response to the criticism by Rod O'Donnell of the account of Keynes’ notion of a general theory in the book How Economics Forgot History (Hodgson, 2001). Several points of full agreement are noted, including the fact that Keynes’ work contains much discussion of historically specific institutions, including the financial and market institutions of modern capitalism. But it is argued here that even copious discussion of historically specific institutions is insufficient to indicate an adequate understanding or conceptual appreciation of historical periodisation or evolution, as developed in various ways by Karl Marx, the German historical school and the original American institutionalists. Keynes’ General Theory is best understood as a theory of modern capitalism. But Keynes did not have sufficient acquaintance with these historically oriented schools of thought to even define the concept of capitalism, or to make that specific historical association clear.

We present an experiment that sets up a context of production of a common output obtained by using production means that are randomly and unequally distributed. Before the production phase, subjects must choose a distributive principle for the output division, under ignorance of the allocation of the production means. Subsequently, they make a distributive choice fully aware of their luck and performance. The aim of the experiment is to test, first, whether ordinary subjects in an impartial situation are capable of converging on a fair principle of distribution – able of redressing the arbitrariness of the initial production means allocation; and second, whether these same ordinary subjects are capable of actually following that principle in a real distributive choice that excludes coercion, reputation effects and other forms of social pressures. The main finding is that a distributive rule that redresses initial inequalities is both accepted ex-ante and actually applied ex-post by most individuals. Our conclusion is relevant for the issue of realism of normative theories of justice and the possibility of institution design aimed at implementing distributive justice principles and policies.

The ancient Greek city-states were slave societies, but the institutions of slavery differed across them. The slaves of democratic Athens were foreigners bought as chattels labouring in agriculture, craftsmanship, banking, mining, and domestic services and were often given some limited freedoms and extra pay. On the contrary, the helots, the slaves of oligarchic Sparta, were indigenous of the lands they cultivated for their masters and were treated harshly. The study offers an economic explanation of the different slavery systems. Modelling the slaveholder as a profit maximiser, it attributes the different systems to differences in the probabilities of the slaves running away or revolting, the dependence of output on effort-intensive or care-intensive production technology, which depends on the fertility of the soil and affects whether the slave is treated kindly instead of harshly, and the cost of guarding slaves under different regimes.

This paper aims at analyzing the interaction between both economic and sociological notions of convention. To this end, it starts by distinguishing conceptually between specific convention, i.e. an arbitrary but stable social regularity, and general convention, i.e. a principle of action prescribing how to behave in a certain class of situations. A game theoretical framework to represent the interrelation between both concepts is then introduced. Finally, this relation is studied experimentally. The main results of the experiment are: (1) general conventions have to be commonly known and adopted among subjects in order to work as guides to coordinate on specific conventions; (2) once subjects follow a general convention they are highly consistent with it in a repeated environment; (3) efficiency concerns are focal in the class of games studied in this paper.

We applaud the effort of Schubert and Cordes (2013, this journal) to contribute a model describing the social mediation of preferences and to apply their results to the more general context of economic welfare. Although we consider this topic to be of utmost importance and interest, we have found a problem in Schubert and Cordes’ argument that renders their statements in Section 3 invalid. After providing some basic intuition on the problem at hand, we present a short proof showing that the assumptions of the model always lead to a stable society. We also report on an interesting non-linear segregation effect that can occur within the Schubert-Cordes model.

This paper replies to Hodgson (2019), which responds to my analysis and critique in O'Donnell (2018). My present aim is clarification of our respective positions, our agreements and disagreements, and their underlying causes. To this end, I elaborate further on the logic underpinning my initial paper, comment on several (not all) key points in Hodgson's response, and conclude with the matter of our different agendas. Space limitations preclude fuller discussion and encourage concise expression.

We assess informal institutions of Protestants and Catholics by investigating their economic resilience in a natural experiment. The First World War constitutes an exogenous shock to living standards since the duration and intensity of the war exceeded all expectations. We assess the ability of Protestant and Catholic communities to cope with increasing food prices and wartime black markets. Literature based on Weber (1904, 1905) suggests that Protestants must be more resilient than their Catholic peers. Using individual height data on some 2,800 Germans to assess levels of malnutrition during the war, we find that living standards for both Protestants and Catholics declined; however, the decrease of Catholics’ height was disproportionately large. Our empirical analysis finds a large statistically significant difference between Protestants and Catholics for the 1915–19 birth cohort, and we argue that this height gap cannot be attributed to socioeconomic background and fertility alone.

This paper investigates what drives countries to legislate presumed consent – making citizens organ donors by default unless they opt out – instead of explicit consent. Results reveal the following: First, civil law predicts presumed consent, which uncovers a mechanism by which an institution that long pre-dates transplantation medicine has an impact on current health outcomes. This is in line with previous research that has found that civil law regimes tend to be more comfortable with a centralized and activist government than common law ones. Second, Catholicism predicts presumed consent. This is consistent with previous research that shows Catholicism generally relies on more hierarchical structures and is less likely to encourage social responsibility among its members. Last, higher pro-social behavior decreases the likelihood of presumed consent. This could be explained by policy-makers trying not to discourage donations where pro-social behavior is high by making it look a requirement rather than an altruistic act. The implications of the findings are discussed, with a particular focus on policy-switches in organ donations.

This paper introduces Aristotle's conception of agency, habits and institutions as a way of contributing to some current discussions about the definition, nature and theory of institutions. Aristotle developed a theory of human action, where we can find a place for ‘agency’. His views on habits are linked to his theory of virtue and art (skill). Concerning institutions, Aristotle provides a sound social and political philosophy that encompasses the nature and role of institutions. The paper will subsequently present Aristotle's ideas on these three notions – agency, habits and institutions – and will finally establish which of the current accounts of institutions involved in the discussion sparked by Hindriks and Guala's recent paper (2005a) he would support. Given that some realities tackled in the paper are nowadays radically different from Aristotle's times, the paper tries to keep an ‘Aristotelian-minded’ point of view – that is, analysing current topics based on Aristotelian concepts.

We investigate the impact of professional networks on men's and women's earnings, using a dataset of European and North American executives. The size of an individual's network of influential former colleagues has a large positive association with remuneration, with an elasticity of around 21%. However, controlling for unobserved heterogeneity using various fixed effects as well as a placebo technique, we find that the real causal impact of networks is barely positive for men and significantly lower for women. We provide suggestive evidence indicating that the apparent discrimination against women is due to two factors: first, both men and women are helped more by own-gender than other-gender connections, and men have more of these than women do. Second, a subset of employers we identify as ‘female friendly firms’ recruit more women but reward networks less than other firms.

The article traces the remains of the theory of “comparative institutional advantage”, which was crucial during the early development of the “varieties of capitalism” approach to economics but fell into oblivion quickly afterwards. It follows the discussions of the concept over time and works out possible reasons – theoretical, methodological, and discursive – for the theory's decay. In conclusion, many arguments of the theory seem outdated today but it is a great witness to the zeitgeist of comparative political economy and institutional theory of the millennium.

We examine the effect of corruption control on efficiency and its implications for efficiency spillovers by a stochastic frontier model. Our dataset covers 102 countries from 1996 to 2014. We find a positive relationship between corruption control and efficiency. If neighboring countries have difficulty in handling corruption, the country would be negatively affected by its neighbors' corruption through efficiency spillovers. We then compare the efficiency differences across countries for three time periods: 1996–2002, 2002–2008, and 2008–2014. On average, technical efficiencies slightly increased in the second period compared to the first period. In the third period, the efficiencies declined, particularly in China.

Ronald Coase had a profound impact on scholarship worldwide, and not for his ideas alone. Coase's ideas about transaction costs, the nature of the firm, the role of government, and the problem of social cost have been hugely influential. Throughout his long life, he also worked to change the conduct of economics, urging economists to ground their conclusions in careful study of empirical reality rather than theories that work only on the blackboard. Less well known, perhaps, is his work to nurture and shape the emerging fields of law and economics and new institutional economics, or his support to young scholars studying institutional issues around the world. In his final years, he was preoccupied by the rapid transformation of China and the institutional structure of production. This article summarizes Coase's significant intellectual contributions to economics, pointing out along the way some of the traits that made him such a powerful thinker and exceptionally influential scholar.

The article briefly introduces Hans Albert and the basic elements of his critique of neoclassical economics as a form of ‘model Platonism’. The two most important elements of his general methodological critique of economics – namely the institutional vacuum inherent in much economic modelling and its unrealistic assumptions about behaviour – are introduced. It is argued that these specific critiques have been taken up with varying degrees of success in areas of economic research such as institutional economics and in behavioural and experimental research programmes. However, the fundamental methodological gist of his critique remains as pertinent to mainstream economics as it was when originally formulated. The influence of ‘model Platonic’ thinking remains pervasive in academia and also in public policy.

History refers both to the past and to the systematic study of the past. Attempts to make a case for history in economics generally emphasize the first definition. There are benefits from increased attention to the past. This paper argues that significant benefits can be gained from increased attention to the systematic study of the past, the historian's craft. The essence of the historian's craft is the critical evaluation of sources. Failure to critically evaluate sources has the potential to lead to erroneous conclusions, whether one is using historical documents or more recently created data.

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.

Local administrations play a key role in delivering adaptation to climate change. To do so, they need to address collective action. Based on transaction costs economics, this paper explores the role of so-called integrative and segregative institutions in the way local administrations adapt – whether their different functional branches respond to climate change collectively rather than independently. Through a comparative analysis of 19 climate-sensitive local administrations in Germany, the paper shows that variation in the way local administrations structure their internal coordination determines the way they approach climate adaptation. Under integrative institutions, local administrations adjust prior coordination structures to accommodate adaptation. Under segregative institutions, administrations move towards integrative institutions in order to adapt, provided they already ‘feel’ climate change.

This paper examines the fundamental nature of numbers as they are used in economic systems. In the framework proposed, number sequences are technological objects (‘tools’) that are constituted by both form and function. To do their job, number sequences have to have the necessary internal structure – all elements (e.g. symbols) of the sequence must be distinct from one another, and the sequence must be a progression. In addition, numerical toolkits have to have the right external structure – they must be situated in a social network of economic agents that confers on them quantitative functions (e.g. identifying set sizes). Number sequences are the product of multilevel evolutionary processes, including psychological selection that screens sequences for their learnability by human users. Number tools are a kind of capital; they are material systems that are as real as other everyday objects. Just as changing physical tools alters the structure of productive activity, so too changing number sequences alters cognitive, behavioral, and social routines.