Thierry Pénard
U. of Rennes



(Wednesday, 1st January 2003)

Title : Game Theory and Institutional Analysis

This workshop aims to illustrate how game theory can contribute to a better understanding of institutions. I will focus on repeated games that have been broadly and successfully used to explain the emergence and the rationale of institutions. This theoretic framework highlights the role of commitment and reputation to enforce cooperation in repeated relationships (or in“relational contracts” - Gibbons, 2000). Therefore repeated games allow to rethink institutions as cooperation-enhancing devices. Applications to merchants guilds in the medieval Europe (Greif, Milgrom and Weingast 1994) and to professional associations in oligopolistic markets will be presented.

Bibliographical references :

Must read reference : Gibbons, R. (2000) "Why Organizations Are Such a Mess (and What an Economist Might do About it)?", Chapter 1 of Organizational Economics (a text in progress) - download from Robert Gibbons' homepage

Must read reference : Greif , Avner, Milgrom Paul, and Weingast Barry (1994) "Coordination, Commitment and Enforcement: The Case of the Merchant Gild.". Journal of Political Economy, vol. 102, No. 4, pp.745-76

Greif , Avner (1993), "Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition." American Economic Review 83(3), June, pp. 525-48 - download from the Stanford Economic Department

Greif, Avner (2001), "Economic History and Game Theory: a Survey », Handbook of Game Theory, Vol. III, Edited by R.J. Aumann and S. Hart, North Holland: Amsterdam - download from the Stanford Economic Department