The Cognitive Dimension of Institutions

25 Pages Posted: 4 Aug 2018

See all articles by James Caton

James Caton

North Dakota State University - Department of Agribusiness and Applied Economics; American Institute for Economic Research; North Dakota State University - NDSU Center for the Study of Public Choice and Private Enterprise

Edward J. Lopez

Western Carolina University

Date Written: July 15, 2018

Abstract

Having pioneered the concept in economics that institutions structure incentives, Douglass North’s later work posed the question, in turn: what structures institutions? His approach explored the role of culture, norms, and ideas and eventually drew its focus on shared mental models as the basis of institutions. An ongoing literature takes up North’s fundamental question. In this paper, we contribute to this literature by bringing together North’s mental-models approach and the work of philosopher John Searle. Searle pioneered the concept in philosophy that institutions are constitutive rules, established through collective assignment of particular status to objects in the world. Drawing upon cognitive science research on knowledge, learning, and habituation, as well as computer science research on artificial intelligence, we develop Searle’s framework to pose a simple yet general account of the cognitive origins of institutions and the implications of this link for social theory. Our framework reconciles the social science approach to institutions as regulative rules with the philosophy approach to institutions as constitutive rules. It also provides a basis for considering impediments to social interaction that arise when individuals possess conflicting normative ideas and affiliate into groups whose shared understandings appear to conflict.

Keywords: Economic Methodology, Analysis of Collective Decision-Making, Search, Learning, Information and Knowledge, Communication, Belief, Unawareness

JEL Classification: B41, D7, D83

Suggested Citation

Caton, James and Lopez, Edward J., The Cognitive Dimension of Institutions (July 15, 2018). Available at SSRN: https://ssrn.com/abstract=3214278 or http://dx.doi.org/10.2139/ssrn.3214278

James Caton (Contact Author)

North Dakota State University - Department of Agribusiness and Applied Economics ( email )

Fargo, ND 58105
United States

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

North Dakota State University - NDSU Center for the Study of Public Choice and Private Enterprise

811 2nd Ave N.
Fargo, ND 58102
United States

Edward J. Lopez

Western Carolina University ( email )

College of Business
Forsyth 224C
Cullowhee, NC 28723
United States

HOME PAGE: http://www.edwardjlopez.com

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