_Institutions FINAL

_Institutions FINAL - Institutions Click to edit Master subtitle style By Douglas C North Presented by Dan Guill Greg Hall Ted Findling and Javier

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Click to edit Master subtitle style  5/10/10 Institutions By Douglas C. North Presented by Dan Guill, Greg Hall, Ted Findling, and Javier Gonzalez-Teja
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 5/10/10 What are Institutions? “Institutions are the humanly devised constraints that structure political, economic and social interaction.” (North) In other words, institutions were created to reduce uncertainty in exchange and lower transaction costs. Some examples include: Informal constraints – sanctions, taboos, customs, traditions, and codes of conduct.
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 5/10/10 Formation of Institutions As trade expanded beyond a single village, the possibilities for conflict over the exchange grew. Because of this, one needed more impersonal ways of contract enforcement. As the size of the market grows and transaction costs increase, more resources must be devoted to measurement and enforcement of cooperation.
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 5/10/10 Problems Institutions Solved There were two big problems that institutions solved: 1. Classical problem of agency Solved by the merchant sending a relative with the cargo to negotiate sale and to obtain a return cargo.
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This note was uploaded on 04/29/2010 for the course ECON 4514 taught by Professor Shuie during the Spring '08 term at Colorado.

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_Institutions FINAL - Institutions Click to edit Master subtitle style By Douglas C North Presented by Dan Guill Greg Hall Ted Findling and Javier

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