History, Analytic Narratives, and the Rules-in-Equilibrium View of Institutions

Analytic narratives (ANs) are case studies of historical events and/or institutions that are formed by the combination of the narrative method characteristic of historical and historiographical works with analytic tools, especially game theory, traditionally used in economics and political science. The purpose of this article is to give a philosophy-of-science view of the relevance of analytical narratives for institutional analysis. The main claim is that the AN methodology is especially appealing in the context of a non-behaviorist and non-reductionist account of institutions. Such an account is fully compatible with the "rules-in-equilibrium" view of institutions. On this basis, two supporting claims are made: first, I argue that within analytical narrative, game-theoretic models play a key role in the identification of institutional mechanisms as the explanans for economic phenomena, the latter being irreducible to so-called "micro-foundations." Second, I claim that the "rules-in-equilibrium" view of institutions provides justification for the importance given to non-observables in the institutional analysis. Hence, institutional analysis building on analytical narrative typically emphasizes the role of derived (i.e., nondirectly observed) intentional states (preferences, intentions, beliefs).