bounded rationality where information is costly and actors are assumed to have

Bounded rationality where information is costly and

This preview shows page 73 - 76 out of 354 pages.

bounded rationality, where information is costly and actors are assumed to have limited processing capabilities. Ostrom (2005) has previously applied the concept of ‘fallible learners’ within the IAD framework, where learning individuals react to institutional incentives. Figure 3.1 provides a visual summary of the IAD.
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60 Figure 3.1: A Framework for Institutional Analysis (as adapted from Ostrom, Gardener and Walker 1994) IAD has been widely applied in combination with common pool resource theory (Ostrom 2007). Common pool resource theory attempts to explain “th e conditions that support self- governance on the part of citizens” subject to institutional arrangements (Schlager 2007, p. 297). As a consequence, its application has typically focused on local and regional settings and encompasses the entire public policy process, however, without a focus on agenda setting. A common pool resource has similar characteristics to a public good, but is not an endless resource, resulting in the danger of being overused or depleted. Common examples are water and forests. As accounting standards can be seen as a public good. Once established, they are not subject to overuse of congestion, and common pool resource theory is not an appropriate theory to investigate the Australia GAAP/GFS harmonisation agenda setting experience. RI provides the most specified and precise consideration of decision-making processes which are typically more soundly and more easily ontologically and epistemologically embedded than HI or SI theories and models. While it can explain how institutions come to exist, RI has been criticised for being functionalist (“ it explains the origins of an institution largely in terms of the effects that follow from its existence”) , intentionalist (“ it tends to assume that the process of institutional creation is a highly Physical/Material Conditions Attributes of Community Rules-in-Use Action Arena Action Situations Actors Patterns of Interactions Outcomes Evaluative Criteria
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61 purposive one, largely under the control of actors who correctly perceive the effects of the institutions they establish and create them precisely in order to secure these effects”) and voluntarist (“[it tends) to view institutional creation as a quasi-contractual process marked by voluntary agreement among relatively equal and independent actors - much as one might find in a ‘state of nature’”) (Hall and Taylor 1996, p. 952). 21 RI has been further criticised for its emphasis on rational, self-interested utility maximisers with fixed preferences and its neglect of a number of factors influencing the public policy process, such as altruistic, normative or cultural motives for its actors. RI theories can explain simple settings and are often employed in laboratory and experimental research (Ostrom 2007). However, their application in settings that try to capture the complexities of change processes is less suited. RI has also been criticised for seeing rationality as instrumental where material interests are separated from ideas (Boudon 2003; Schmidt 2008).
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  • Fall '13
  • Government, The Land, International Financial Reporting Standards, Financial Accounting Standards Board, Australian Accounting Standards Board, Snow

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