Institutions are rules that are supported by various enforcement
mechanisms. Cognition refers to the process of how men perceive and
process information, whereas rationality refers to how these
processes are modelled. Within institutional economics there is a
growing scepticism towards extending the conventional economic
frame of analysis to institutions. In particular, the notion of
perfect rationality is increasingly questioned. At the same time
human cognition has become a major field of research in psychology.
This book explores what institutional economics can learn from
cognitive psychology regarding the proper modelling of rationality
in order to explain institutional change.
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