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Games 2014, 5(3), 160-187; doi:10.3390/g5030160

An Agent-Based Model of Institutional Life-Cycles

1
Institute for Ecological Economics, Department Socioeconomics, Vienna University of Economics and Business, Welthandelsplatz 1/D4/2nd Floor/D4.2.232, 1020 Wien, Austria
2
Institute of Mathematical Methods in Economics, Research Group Economics, Vienna University of Technology, Argentinierstraße 8/4/105-3, 1040 Wien, Austria
*
Author to whom correspondence should be addressed.
Received: 15 February 2014 / Revised: 4 August 2014 / Accepted: 8 August 2014 / Published: 18 August 2014
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Abstract

We use an agent-based model to investigate the interdependent dynamics between individual agency and emergent socioeconomic structure, leading to institutional change in a generic way. Our model simulates the emergence and exit of institutional units, understood as generic governed social structures. We show how endogenized trust and exogenously given leader authority influences institutional change, i.e., diversity in institutional life-cycles. It turns out that these governed institutions (de)structure in cyclical patterns dependent on the overall evolution of trust in the artificial society, while at the same time, influencing this evolution by supporting social learning. Simulation results indicate three scenarios of institutional life-cycles. Institutions may, (1) build up very fast and freeze the artificial society in a stable but fearful pattern (ordered system); (2) exist only for a short time, leading to a very trusty society (highly fluctuating system); and (3) structure in cyclical patterns over time and support social learning due to cumulative causation of societal trust (complex system).
Keywords: institutional economics; institutional life-cycles; agency-structure dynamics; iterated prisoners dilemma; agent-based modeling; applied game theory; evolutionary political economy; complexity institutional economics; institutional life-cycles; agency-structure dynamics; iterated prisoners dilemma; agent-based modeling; applied game theory; evolutionary political economy; complexity
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

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Wäckerle, M.; Rengs, B.; Radax, W. An Agent-Based Model of Institutional Life-Cycles. Games 2014, 5, 160-187.

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