Management summary Research study „Push factors of endogenous institutional change“

Theories of endogenous institutional change typically focus on how to achieve a given outcome and how to stay in this outcome. To put it simply, people know what they want, and they only need to figure out how to get there and how to stay there. I propose a framework where people are dissatisfied with the status quo, which motivates them to search for better institutions. They know that something has to be done, but they need to figure out what and how. Dissatisfaction with the status quo is modelled as mutual incompatibility of people’s plans. This incompatibility of plans may occur even in a Nash equilibrium. Therefore, a lack of “order” (i.e., a high degree of plans incompatibility) does not imply disequilibrium. The proposed framework allows for institutional entrepreneurship (the set of possible outcomes of actions is not known in advance), and it shows that there can be entrepreneurial action in equilibrium.


Target groups of stakeholders: Academics in the field of institutional economics

Citation: Hudik, M. (2021). Push factors of endogenous institutional change. Journal of Economic Behavior & Organization 189, 504-514.