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Conventions: An evolutionary approach

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  • Karl Wärneryd

Abstract

Conventions are social institutions that solve recurrent coordination problems. In normative game theory, coordination games are considered problematic because of the multiplicity of equilibria. From a neoinstitutionalist perspective, however, this multiplicity should be an important part of the explanation of real-world institutions. The paper discusses the evolutionary (or “positive”) game-theoretical approach to the emergence of conventions. I note a precise sense in which conventions may be said to minimize transaction costs, but that they need not be efficient. Example applications to language, money, and the theory of the firm are discussed. Copyright George Mason University 1990

Suggested Citation

  • Karl Wärneryd, 1990. "Conventions: An evolutionary approach," Constitutional Political Economy, Springer, vol. 1(3), pages 83-107, September.
    • Handle: RePEc:kap:copoec:v:1:y:1990:i:3:p:83-107
    DOI: 10.1007/BF02393242
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    References listed on IDEAS

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    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, April.
    2. Elster,Jon, 1983. "Explaining Technical Change," Cambridge Books, Cambridge University Press, number 9780521270724, September.
    3. Langlois,Richard, 1989. "Economics as a Process," Cambridge Books, Cambridge University Press, number 9780521378598, September.
    4. Vanberg, Viktor, 1986. "Spontaneous Market Order and Social Rules," Economics and Philosophy, Cambridge University Press, vol. 2(1), pages 75-100, April.
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    Cited by:

    1. Schmidt, Susanne K. & Werle, Raymund, 1993. "Technical controversy in international standardization," MPIfG Discussion Paper 93/5, Max Planck Institute for the Study of Societies.
    2. Horwitz Steven, 1993. "Spontaneity and Design in the Evolution of Institutions: The Similarities of Money and Law," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 4(4), pages 571-588, December.
    3. Sally, David, 2005. "Can I say "bobobo" and mean "There's no such thing as cheap talk"?," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 245-266, July.

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