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Regular version of the site

Institutional Economics

Academic Year
Instruction in English
ECTS credits
Course type:
Elective course
4 year, 1, 2 module


Course Syllabus


The Course on Institutional Economics is an essential step towards understanding institutions and their role in economics and society. During this course we will show that in a world where all transactions are connected with costs and people squint towards opportunism it is important to create rules and systematically monitor everyone following them. Together these rules and enforcement mechanisms are called institutions. The main objective of this course is to demonstrate how institutions work in various spheres, what happens if they become weak or inefficient. We will talk about the institution of property rights and about contracts, will look for historic examples and analyze modern cases, will nd evidence of the fact that institutions are vitally important for the prosperity of countries as well as for making the simplest transactions between citizens possible. The Course gives an overview of modern institutional theory, its development and current state, its basic instruments and approaches. Special focus is made on ways to use these instruments and approaches for solving real-life problems.
Learning Objectives

Learning Objectives

  • to form a detailed view about current development of new institutional theory, about main instruments and approaches
  • to develop competences, which allow to implement the methodology of new institutional economics towards solving practical problems
  • to develop competencies, which allow implementing the methodology of new institutional economics towards solving practical problems
Expected Learning Outcomes

Expected Learning Outcomes

  • Ability to use instruments of game theory and social networks to analyse institutions
  • Ability to use instruments of game theory to analyse incentives in transactions
  • Ability to use instruments of game theory to analyse institutions
  • Ability to use instruments of new institutional economics to analyse contracts
  • Ability to use instruments of new institutional economics to analyse firms
  • Ability to use instruments of new institutional economics to analyse particular institutions
  • Ability to use instruments of new institutional economics to analyse relations between firms, individuals and state
  • Ability to use theory of institutions in analysis of institutional environment of different settings
  • Understanding of main questions that could be addressed by New Institutional Theory
Course Contents

Course Contents

  • Introduction to New Institutional Economics.
  • Institutions
  • Transaction Costs
  • Institutions, Transaction Costs and Networks
  • Contract Theories
  • Institutions of Property Rights
  • Property rights, Agency costs and Economic outputs
  • Institutional Change, Institutions and Growth.
Assessment Elements

Assessment Elements

  • non-blocking Homework
  • non-blocking Control work
  • non-blocking Research project
  • non-blocking Work on the seminar
Interim Assessment

Interim Assessment

  • 2021/2022 2nd module
    0.25 * Work on the seminar + 0.2 * Homework + 0.25 * Research project + 0.3 * Control work


Recommended Core Bibliography

  • Bloom, N., Liang, J., Roberts, J., & Ying, Z. J. (2015). Does Working from Home Work? Evidence from a Chinese Experiment*. Quarterly Journal of Economics, 130(1), 165–218. https://doi.org/10.1093/qje/qju032
  • COASE, R. H. (1988). 1. The Nature of the Firm: Origin. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.6EF0F9C3
  • Economic behavior and institutions, Eggertsson, T., 1997
  • Furubotn, E. G., & Richter, R. (2005). Institutions and Economic Theory : The Contribution of the New Institutional Economics (Vol. 2nd ed). Ann Arbor: University of Michigan Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=469024
  • Guiso, L., Sapienza, P., & Zingales, L. (2006). Does Culture Affect Economic Outcomes? Journal of Economic Perspectives, 20(2), 23–48. https://doi.org/10.1257/jep.20.2.23
  • Hendrikse, G., Hippmann, P., & Windsperger, J. (2015). Trust, transaction costs and contractual incompleteness in franchising. Small Business Economics, 44(4), 867–888. https://doi.org/10.1007/s11187-014-9626-9
  • Johnson, N. D., & Nye, J. V. C. (2011). Does fortune favor dragons? Journal of Economic Behavior & Organization, (1), 85. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.eee.jeborg.v78y2011i1p85.97
  • North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=510978
  • Polterovich, V. (1999). Институциональные Ловушки И Экономические Реформы[Institutional Traps and Economic Reforms]. MPRA Paper. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.pra.mprapa.27257
  • Property rights for the poor: effects of land titling. (2010). Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.F39178F5
  • Raymond Fisman, & Shang-Jin Wei. (2009). The Smuggling of Art, and the Art of Smuggling: Uncovering the Illicit Trade in Cultural Property and Antiques. American Economic Journal: Applied Economics, (3), 82. https://doi.org/10.1257/app.1.3.82
  • Steven Tadelis. (2016). Reputation and Feedback Systems in Online Platform Markets. Annual Review of Economics, (1), 321. https://doi.org/10.1146/annurev-economics-080315-015325
  • Sümeyra Atmaca, Koen Schoors, & Marijn Verschelde. (2016). Bank Loyalty, Social Networks And Crisis. Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.rug.rugwps.16.923

Recommended Additional Bibliography

  • Bolton, P. (DE-588)128734906, (DE-576)170475301. (2005). Contract theory / Patrick Bolton and Mathias Dewatripont. Cambridge, Mass. [u.a.]: MIT Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edswao&AN=edswao.114696918
  • Camerer, C. F., & Fehr, E. (2006). When Does “Economic Man” Dominate Social Behavior? Science, 311(5757), 47–52. https://doi.org/10.1126/science.1110600
  • Demsetz, H. (1967). Toward a Theory of Property Rights. American Economic Review, 57(2), 347. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=bsu&AN=4493727
  • Frye, T. (2004). Credible Commitment and Property Rights: Evidence from Russia. American Political Science Review, (03), 453. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.cup.apsrev.v98y2004i03p453.466.00