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elinor ostrom: 1933-2012

The press conference after the 2009 announcement, with a brief summary of her research.

Elinor Ostrom passed away, after a bout with pancreatic cancer. Professor Ostrom was a leader in political science. Her career was dedicated to studying how people in the real world solved the commons problem. Her book, Governing the Commons, is a key work in public choice economics. She also was an excellent citizen at IU and in the professional worlds of political science and economics. At IU, she created the Political Theory and Policy Analysis Workshop, one of the nation’s leading centers for the study of political economy. She was also APSA president and president of the public choice association. In 2009, she was awarded the Nobel memorial prize in economics. Personally, she was gracious. We interacted a few times. She was always positive and supportive of my work. She was also an advocate of young scholars and helped many in their careers. She leaves a great legacy. Read previous orgtheory posts on Ostrom here.

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Written by fabiorojas

June 12, 2012 at 5:45 pm

of cows and collective action, ostrom wins a nobel

Elinor Ostrom has won the Nobel Prize in Economics.  Boo rah!

For a lot of orgTheory readers, Oliver Williamson’s win will be the more exciting and relevant of this year’s laureates.  Oliver Williamson is really one of us; many orgTheorists find his work compelling or at least a useful foil.  But I’ll let others comment on Williamson because, for my money, the questions and topics that Ostrom work on are as (if not more) relevant and compelling to my understanding of organizations and of organization theory.

Sometimes it is the quality of the questions one asks — more, perhaps, even than the answer one gives — that makes for a great thinker.  To some degree, I think this applies to Ostrom.  In the end, I find her answers somehow incomplete.  But, the questions she asks as she breaks down the larger puzzle are compelling.

CowsonthecommonsHer fundamental question is this: in a world of abundant but rapidly depletable resources, where individuals have incentives for survival that, if acted on, would undermine the long-term viability of the resources on which they depend, how does coordination and cooperation emerge? That is, she’s interested in the Tragedy of the Commons.  The term derives from the fact that farmers with access to the local grazing land (The Commons) have an incentive to feed their cattle as much as possible.  But if all farmers fed their cattle as much as possible it would rapidly deplete the grass leading all of their cattle to suffer.  There are two prevailing answers to that dillema: (1) may the best farmer win (which would mean the commons would no longer be a commons) or (2) institute some set of rules and enforcement mechanisms to govern the behavior of farmers.  Obviously, the second often wins out.  The question is how.

Her conclusion: it’s complex.  There is no silver bullet (which makes it all the more surprising that the Nobel committee has decided to honor her work.  Economists, I’ve noticed, put a lot of value on “elegance”; Ostrom is a strong writer, but elegant… not so much).  There are a series of mechanisms that come into play to keep good order and that, if harnessed and understood, can lead to behavior that sustains survival. Read the rest of this entry »

Written by seansafford

October 12, 2009 at 1:23 pm

bostrom and kurzweil


If you’re bored — Nick Bostrom’s Oxford site always has something interesting, provocative and future-oriented one can read. Ray Kurzweil’s site as well.

Written by teppo

May 7, 2007 at 3:43 am

the prisoner’s dilemma in 2020

This is a post whose content I have been meditating on, for a long time, since I last wrote about my concerns about responses to SARS-CoV-2 in March.  For years, I’ve taught about the classic prisoner’s dilemma in the context of Nobel Prize winner Elinor Ostrom’s Governing the Commons book.  Ostrom’s book draws on collectives to explain how such groups collectively self-manage and regulate common resource pools like fisheries and grazing grounds; her work offers some insights into how to tackle shared, contemporary issues.  For example, many of us have concerns about how to combat environmental degradation, where the longterm outlook is often hard to forecast against shortterm gains and externalities generated by corporations. 

With SARS-CoV-2’s worldwide spread, the prisoner’s dilemma is now evident in everyday decisions on the part of individual people, organizations, and governments. These decisions, in aggregate, have both immediate and longterm consequences for all:

Scenario 1Both parties defect: Most or all persons fail to wear masks properly, socially distance to the fullest extent possible, and/or live and work with conditions that promote safer interpersonal contact (i.e. gets tested with short turn-around results, cooperates with contact tracing, spends time outdoors or indoors with open windows, enhanced air circulation, etc.).  The outcome of not reducing risky activities manifests in collectively worse outcomes for everyone – societies experience more illnesses, more need for hospitalizations at the same time (which hospitals cannot handle given staffing and equipment capacity), more deaths, more not-yet-know longterm effects, more uncertainty, etc. 

Scenario 2One party defects while the other party cooperates: One party refuses to do social distancing, mask usage, etc. while the other does.  The outcome is still worse for everyone, but less so compared with when both parties defect.  

Scenario 3Both parties cooperate: Everyone engages in proper mask wearing, social distancing, regular, rapid testing, etc.  These actions hopefully push transmission down to few or no cases.  This is the most ideal outcome from a collective health standpoint.

In NYC, my students and their communities have learned the hard way about the consequences of the prisoner’s dilemma, especially given the failures of various elected leaders and organizations to properly conceptualize and communicate risk.  I tried my best, from the beginning of the spring semester, to prepare my undergrad and grad students, my household, and those around me for what I thought was likely to happen, based on what I had read about China and recommendations from qualified experts.  For example, I told students to start identifying neighborhood businesses and organizations that they might have to patronize, should they no longer be able to travel.  If they lived in the dorms, I encouraged them to think through plans for returning home.  I asked students to test working online with their devices.  I intensified my teaching of decentralized organizing techniques, including mutual aid.  I spent time in multiple meetings, explaining to administrators my preparatory steps for moving online, and drafting and sending emails asking decision-makers at various organizations to take steps to protect communities.  I contemplated what to do if I got incapacitated.

Here’s what we experienced, healthwise, in the spring 2020:

  • a death of the senior-most colleague in my department
  • a student, who had been ill himself, learned of a death in his extended family, during groupwork in my class
  • students and their family members hospitalized
  • students and CUNY colleagues suspected they had COVID-19 symptoms (headaches, fevers, cough) but couldn’t get tested for COVID-19
  • one student’s entire family got sick, possibly from their child’s school which had teachers who had been hospitalized. This student almost died due to an nearly too late diagnosed complication of COVID-19.
  • death of a parent at my child’s school

My CUNY colleagues reported similar or worse experiences; for example, one undergraduate lost both parents to COVID-19.  Everyday during our lockdown, every passing siren was an auditory reminder of how failed states can deplete collective capacity to coordinate effective action.

When I talk with academic colleagues and my research communities across NYC and the US, they have reported voluntarily following the recommendations of experts who have researched public health, indoor air quality, and aerosol diseases.  Most are at organizations that have allowed them to work from home or outdoors.  They have chosen to reduce exposure and transmission risks, for example, by wearing masks and replacing riskier activities, such as dining and socializing indoors with those outside of their households, with other kinds of activities like virtual meetings, walking together outdoors while masked, etc.  Some do it out of concerns for their own health; others are concerned for those around them.    

When we talk about how life has changed and will continue to change, we acknowledge that we have the means and privilege to do this, and that we do this in order to collectively reduce risks for those who cannot.  Accepting such changes has not always been easy, especially when we are unsure when we can next gather with loved ones safely, across long physical distances.  Each day feels like the 1990s movie Groundhog Day, but with deaths, illness, and grief.  The temptation to individually defect, in an attempt to return to the 2019 “normal,” is high.  That said, mutual cooperation is much easier if we think of our interdependent futures, as well as our connections with prior and upcoming generations.

In the absence of coordinated state action, informal and formal organizations can step in. Organizations like schools and universities can offer decision-making guides to their members about the impact of participating in get-togethers and similar “individual decisions” upon surrounding communities. Organizations can support people in collecting data that might not otherwise be deemed by gatekeepers as worthy of inclusion. With these steps, people can learn about possible risks to their community, and take actions that might eventually generate a collective best, rather than worst, outcome for all.

Written by katherinechen

October 7, 2020 at 6:35 pm

Posted in uncategorized

Tagged with ,

amy wax v. fabio

Tomorrow at noon, I will be a guest at the Ostrom Workshop and the Jack Miller Center, where I will respond to University of Pennsylvania Professor Amy Wax. Her talk is called “What is Happening to the Family and Why?” I will then offer some comments in response to the talk. If you are in Bloomington, please come by and say hello!

Event details: Noon to 1pm at the Tocqueville Room of the Ostrom Workshop, 513 N. Park Street, Bloomington, Indiana.

50+ chapters of grad skool advice goodness: Grad Skool Rulz ($4.44 – cheap!!!!)/Theory for the Working Sociologist (discount code: ROJAS – 30% off!!)/From Black Power/Party in the Street / Read Contexts Magazine– It’s Awesome!

Written by fabiorojas

February 5, 2018 at 7:15 pm

Posted in fabio, family, uncategorized

nudging the economists (guest post by juan pablo pardo-guerra)

It is the best of prizes. It is the worst of prizes. Let me focus on the latter.

On Monday, the renowned behavioral economist Richard Thaler was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel Prize in Economics. For the Washington Post, the award made “economics more human—and real”. For The Atlantic, it was a much-deserved recognition for someone whose “career has been a lifelong war on Homo economicus”. There may be much to celebrate, but there is even more to ponder.

Thaler’s award speaks to three problems in economics and its relation to the ‘real world’ it inhabits. Firstly, it is disparaging that the prize recognizes research showing “that people can be influenced by [mostly social] prompts to alter their behavior” given that other sections of the social sciences have been doing this for, well, just about forever (e.g. seems there was this French dude called Gabriel Tarde…). This year’s Nobel Prize was as much a recognition of behavioral economics within the intellectual firmament of the discipline as a legitimation of economic imperialism: a finding is only truly relevant if published by an economist (corollary: being an economist from Chicago helps).

This year’s Nobel Prize is problematic for a second reason. Behavioral economics does not seem to be in the same league as the politically troublesome contributions of some of the more controversial previous laureates (think: Milton Friedman or Robert Lucas), but as a matter of fact, it sort of is. Though it might make economics “more human—and real”, the behavioral turn doesn’t make away with the ontological commitments of discipline, privileging market processes and individual action as the fundamental sources of virtue. Consider the metaphor of the ‘nudge’, central to the type of applied behavioral economics that made Thaler’s research so publicly relevant. Rather than questioning the economics of general equilibrium, ‘nudging’ is a proposal in calculated engineering: we can build policies that create outcomes similar to those of theory by gently walking slightly irrational, bounded economic agents through the correct ‘architectures of choice’. I am not saying that this is not positive: I am sure that creating psychological incentives so that people increase their investments in retirement will eventually help them; but so would a stronger social security net and a stronger, better funded state welfare apparatus. At the end of the day, the metrics of success in behavioral economics are uncritical of how the economy is built and remit to the ‘less human’, more market-centered, and ‘more surreal’ varieties of economic analysis that behavioral economists like Thaler so bemoan at a first degree of approximation.

Thirdly, the economics prize showcases and arguably reproduces the lack of diversity and intellectual variety in the discipline. Historically, the economics prize is overwhelmingly white and male. Only one woman received the prize to date—Elinor Ostrom, “for her analysis of economic governance”; the same is true for non-white economists—represented by Amartya Sen for his “research on the fundamental problems of welfare economics”. So while economics might expand its reach in colleges, universities, and government offices throughout the world, the Nobel committee reminds us year after year that there is pretty much one type of economics that is better than the rest. It has a race; it has a gender. This is quite regrettable, particularly in a year when discussions about gender in economics were so prominent in the news. There is no dearth of women or minorities in economics—example: Maureen O’Hara’s work in market microstructure theory is perhaps more relevant and intellectually important than Eugene Fama’s somewhat passé discussions of asset prices and market efficiency from the 1970s that were recognized with the Nobel Prize in 2013. (Harvard’s Carmen Reinhart also jumps to mind).

So this was the best of prizes (for Thaler—kitchen remodel) and the worst of prizes (for the rest—economics won’t change much), a missed opportunity to nudge the discipline in a slightly different direction. Perhaps this is asking too much from a committee that represents all too well the gendered dynamics of economics in Sweden (I could not find a female committee member, but I might be wrong): in 2005, Statistics Sweden only identified one full professor of economics in the entire country. How’s that for an architecture of choice?

Juan Pablo Pardo-Guerra is an assistant professor of sociology at UCSD. His research explores the connections between markets, cultures and technologies.


Written by jeffguhin

October 11, 2017 at 12:26 am

a general theory of chest-bursting sociology

To me, learning about a scholar’s intellectual trajectory and philosophy is helpful for understanding the impetus for particular schools of thought.  One of the pivotal moments for me during my grad school days was hearing Neil Fligstein‘s candid perspective about having to advocate for one’s research question, methods, and claims.  In fact, he compared being an academic with being the creature from Alien(s).  That’s right, we’re not the flame-toting Lt. Ripley and the heroic but ill-fated Nostromo crew; we’re more like the chest-bursters who have to keep coming back, no matter how many times we get (spoilers ahead! cover your eyes, young’uns) burnt, ejected from the airlock into outer space, frozen, etc.

Not you.

Not you.

With that imagery in mind, have a look at Fligstein’s discussion of his most recent works. Fligstein talks in an interview with McGill student Nicole Denier about how he decided upon a PhD in sociology (hint: a foray with social movements), where he sees the field headed, and his agenda for grand general theory.

ND: …what do you think are the challenges for sociology to overcome in the next few years?

NF: What I have found most frustrating about sociology is that it is so Balkanized. One of the most depressing things about sociology is when I look at the American Sociological Association and see that there are forty-four sections, which could be reduced to about six. It tends to create these Balkanized theory groups (for lack of a better term) that are engaged in a discourse with ten other people. From a graduate student’s point of view, that’s the hardest thing to face in the field—how fragmented it is. The problem is that there just aren’t that many people. There are only about 15,000 sociologists in North America, I think. It was bad when I was a graduate student twenty-five years ago, it’s much worse now. It’s very frustrating for people and it’s hard to overcome. One of the things I like about the construction of something called economic sociology is that for the first time in 30 years there is a synthetic field – not a field which wants to break the field into smaller and smaller parts—but a field that wants to say that politics and law and economic processes and organizations and social movements are all part of the same thing. So to me, this is what this economic sociology thing is all about. It is more synthetic than breaking it into a smaller piece.

ND: Similarly, your field theory has the possibility to span a number of areas. You’re not so optimistic about it overcoming the differences between the institutionalisms in economics, political science, and sociology. But do you think it can bridge the gaps within sociology?

NF: I’m an optimistic person. I hope that it becomes more synthetic. People have moved so far from (I’ll use a dirty word) a general theory of society or a theory of society that it’s not in their vocabulary any more. It was so discredited so long ago that you’re a bad person if you even have that thought. It’s a big taboo in sociology to say that, you know, there really is a general theory of society. Again, you get off stage with people and you talk to them and a lot of people think there is a general theory of society….[snip!!!]…. Sociologists tend toward understanding action in groups, yet we don’t even think about it most of the time. Field theory is about that: how groups of people and groups of groups do these kinds of interactions and watch other people and reference other people and take positions, a very generic level of social process. I figure a lot of people are ready to hear that message in sociology. Hopefully, it will go a little further beyond where it is right now.

(See Fligstein’s past orgtheory posts here and here on his work with Doug McAdam on strategic action fields, as well as other colleagues’ reactions here, here, and here.)

You when you finally get a love note.

When you find a like-minded colleague.

Written by katherinechen

December 11, 2013 at 12:08 am

man and the economy: do we really need another economics journal?

I’m a big fan of Ronald Coase. If you work in the domain of organization theory, his 1937 piece — written when he was but a lad — is seminal. And Coase’s work also paved the way for subsequent contributions and Nobel prizes in institutional economics, for brilliant scholars like Oliver Williamson and the late Elinor Ostrom.

Coase (at 101!) has recently published several pieces challenging mainstream economics: a piece in the current issue of Harvard Business Review on “saving economics from the economists” and then a BusinessWeek article “urging economists to step away from the blackboard.”

In these articles Coase lays out quite a few charges – mainstream economics is too abstract, is overly focused on resource allocation and not production, doesn’t offer any  practical advice to entrepreneurs or managers, is not realistic, is not attuned to comparative issues, doesn’t pay attention to institutions, is too focused on self-interest, etc, etc.

“Mainstream” economics of course is fun and easy to bash.  But frankly, I think that the whole mainstream notion is a bit of a dead horse; has been for a while.  The amount of heterogeneity in economics in fact is quite large.  There are now large literatures (and dedicated journals) that specifically deal with many of the concerns that Coase has.  For example, economists have looked at factors such as fairness and inequity aversion (e.g., Fehr, Schmidt), comparative and institutional dynamics (e.g., Greif, North), work on human capital (e.g, Lazear), etc, etc.  And, there are of course many heterodox areas of economics, such as the Austrian School (folks at George Mason – and of course our evil O&M twinners) or evolutionary economics (Nelson and Winter), that depart from “standard’ assumptions.  And certainly there are many disciplines, closely allied with economics (economic sociology, anthropology, strategy, etc), that deal with some of the other concerns (realism, comparative factors, practical advice, etc).  For example, Williamson’s work (as discussed here) on organizational boundaries and production is now vigorously being carried forward by scholars working at business schools.

Sure, there might be a hard core of economists to which Coase’s critique could be applied.  And yes, there might be conferences and departments that you would get laughed out of if you brought up institutions, embeddedness or some such concept. But on the whole, I just don’t buy it.  I think the mainstream economics stereotype is old and tired.  Let it die.

And can’t we just say there is a certain division of labor, where some, with their preferred tools and methodologies, look at certain aspects of economic activity in one way, and others, with their preferred tools and methodologies, look at those same aspects in a different way.  Kum ba yah.   Think about it as different lenses on the phenomenon (though, I have to say that my Meyerian cookie-pushing self really hates that notion).

Or maybe this is a question of influence.  Should economists, for example, cite sociologists more (see Ezra’s piece related to this)?  Perhaps.

Well, it appears that the solution for the problems is an effort by Coase and a colleague to start a new journal, Man and the Economy.  Sounds interesting.  However, given the mega-mass of economics journals out there, I don’t see how another journals solves anything.  This web site lists 318 different economics journals, and this paper ranks 178 economics journals.  (If you add disciplinary journals into the mix, we’re quickly into the thousands.)   There’s a little something for everyone amongst these journals (definitely of varied quality) – you want economics and sociology, it’s there.  Applied econ, it’s there.  Econ and philosophy, it’s there.  Econ and institutions, there.  Etc.

Bottom line, as much as I respect Coase, I don’t buy the “mainstream” notion given the heterogeneity in the field of economics.

Written by teppo

December 5, 2012 at 6:57 pm

Posted in uncategorized

institutional change and rule configurations

The most recent issue of the Journal of Institutional Economics is dedicated to the “evolution of institutions.”   Several interesting articles.  The piece that caught my eye outlines a “diagnostic tool for analyzing institutional dynamism.”  The article is written by Elinor Ostrom and Xavier Basurto, titled “Crafting analytical tools to study institutional change.”

So, the paper tries to, very practically, offer a framework of sorts for studying configurations of rules and systems.  Table 1, below, summarizes the defaults for their various “rule types” (boundaries, aggregation, information etc).  The authors, then, apply the framework to a typical “commons” problem: irrigation systems.

A pretty straightforward, interesting paper.  The paper of course has a normative, design flavor (in a refreshing way).  And, it also has a very set-theoretic feel (e.g., see Table 3) and indeed cites the work of Charles Ragin.  (Of course, Peer Fiss has lately been doing lots of work in this space, highlighting the potential of fuzzy sets type methods for comparative organizational analysis.)

Worth a read.

Written by teppo

September 22, 2011 at 9:12 pm

firms and organizations: fictions or real persons?

I was doing some aimless browsing this morning — here are a few law and economics-type papers on the matter of organizations as real persons versus fictitious entities (beyond some of the classics that we’ve referenced here before).

Iwai, K. 1999.  Persons, things and corporations: the corporate personality controversy and comparative corporate governanceAmerican Journal of Comparative Law.

Gindis, D. 2009. From fictions and aggregates to real entities in the theory of the firm.  Journal of Institutional Economics.

Smith, B. 1928. Legal personality.  Yale Law Review.

Ripken. S. 2009.  Corporations are people too: A multi-dimensional approach to the corporate personhood puzzle.  Fordham Journal of Financial & Corporate Law.

Pagano U. 2010. Legal persons: the evolution of a fictitious species. Journal of Institutional Economics.

Binder, J. 1907.  Das Problem der juristischen Persönlichkeit.

UNRELATED BONUS. While browsing I also ran into this:

In his interesting and controversial review article, Fabio Rojas (2006) refers to the ‘imperialism’ of sociological theories of market behavior and argues for recognizing the essential importance of culture and social structure in explaining economic behavior and outcomes.

That’s Nobel laureate Elinor Ostrom’s first line in this article.

Written by teppo

January 13, 2011 at 5:24 pm

transaction cost economics: origins, present, future

I’m still a bit blown away that economists barely know Williamson’s work (let alone Ostrom’s work — this was discussed by Steven Levitt here).   However, thankfully issues of organizational boundaries and comparative institutions are being pursued by Williamsonians and organizational scholars at business schools (as we discussed here).

Given the 2009 Nobel, there have been some TCE origins/overview/future-type pieces that might be of interest to readers:

Williamson, O. 2010.  Transaction cost economics: the origins. Journal of Retailing. Some interesting details in this article.  I like the remark about the “Carnegie Triple” (I thought it referred to Williamson, March, Simon or something): be disciplined; be interdisciplinary; have an active mind.  Also, encouragement he got to “be his own man.”  Etc.

Williamson, O. 2009. Transaction cost economics: the natural progression.  Nobel Lecture.  Obviously, a nice summary of transaction cost economics.

Gibbons, R. 2010.  Transaction cost economics: past, present, and future? Scandinavian Journal of Economics.

Klein, P., & Sykuta, M. (Editors.) 2010.  The Elgar Companion to Transaction Cost Economics.

Frankly, there seems to be lots of opportunity to integrate transaction cost logic with more sociological approaches to organizations and markets.  There have been references to this type of “unification” (by Williamson and, for example, Granovetter), though there is virtually no program of research, that I am aware of, that is attempting to do this.  I don’t necessarily mean unification in a “strong” sense, but even just a programmatic effort which takes insights from both disciplines seriously, focused on understanding the organization-market nexus, comparative institutions and heterogeneity. 

Written by teppo

January 6, 2011 at 8:32 am

ambitious titles

Whether you think he’s right or wrong on the substance, you can’t fault Nick Bostrom for a lack of ambition in his titles —- here’s one: “The Future of Humanity.”

Written by teppo

September 30, 2010 at 6:37 am

urb/orgs part 3: land trusts, elites, and the public good

16 June 1947

Motored to Brockhampton, arriving in the cool of the evening. How beautiful this place is. I walked down to Lower Brockhampton just before dark, the trees dead quiet, not even whispering, and the undergrowth steaming. Two enormous black-and-white bulls gave me a fright by noiselessly poking their great faces over a gate and peering at me in a meditative manner. This evening the whole tragedy of England impressed itself upon me. This small, not very important seat, in the heart of our secluded country, is now deprived of its last squire. A whole social system has broken down. What will replace it beyond government by the masses, uncultivated, rancorous, savage, philistine, the enemies of all things beautiful? How I detest democracy. More and more I believe in benevolent autocracy. (Lees-Milne 2009, p. 18)

This little gem comes from the diaries of James Lees-Milne, the Historic Buildings Secretary of England’s National Trust. The extensive diaries of Lees-Milne’s journeys around the British countryside acquiring properties for the Trust are very funny and gossipy stuff for Merchant Ivory fans or those with a bent for real estate exotica. His personal life was even juicier. Mike McQuarrie asked in an earlier comment why cheap, low-quality architectural design for the masses is so “anti-social,” and Lees-Milne’s elegy vividly shows how preservation movements are tied up with anti-democratic sentiment and social control– a standard critique in a wide variety of environmental literatures (my favorite here). In my last post in this series, I talked about the often unheralded role of real estate in organizational life, using Dorothy Height’s memoir of her work with the National Council of Negro Women as an example. This time, I stick with life-writing about organizational work, but shift to consider a special kind of organization–  private land trusts and historic preservation societies that seek to conserve real estate itself, typically for its architectural, historic, or environmental value.

Herefordshire bull, 2008, by Arun Marsh

Read the rest of this entry »

Written by carolinewlee

August 5, 2010 at 11:44 pm

experimental economics

If you want a heavy dose of experimental economics — and who doesn’t? this stuff is fascinating — then I highly recommend a recent special issue of the Journal of Economic Behavior & Organization. The JEBO special issue features top scholars in the space (Vernon Smith, Ernst Fehr, Ken Binmore, Elinor Ostrom, Herbert Gintis, etc, etc) wrestling with some big questions — the role of context in experiments, problems of generalization, psychology-economics links, challenges to experimental findings, future directions for experimental economics, and so forth.

Ken Binmore and Avner Shaked have a particularly provocative essay (non-gated here), challenging the Fehr-Schmidt model of “inequity aversion.”  (The opening sentence of Binmore-Shaked: “The long heralded reintegration of economics with psychology is now an accomplished fact.”)  And, the special issue features a response by Fehr-Schmidt and then a Binmore-Shaked rejoinder.

Excellent stuff.

Written by teppo

May 3, 2010 at 5:47 am

what is organizational economics?

The most recent issue of the Journal of Institutional Economics has an excellent exchange of ideas on organizational economics.  The issue begins with an essay by Richard Posner: “From the new institutional economics to organization economics: with applications to corporate governance, goverment agencies, and legal institutions.”

The essay indirectly and directly touches on all kind of questions:  What are comparative similarities in governance between private versus public organizations?  What role do incentives and compensation play?  What is organizational economics?  Are executives overpaid?  Many of these issues are discussed in the context of looking at two government organizations — the intelligence community broadly, and the FBI.  Interesting stuff.

Even cooler than the essay itself: more than a dozen scholars were asked to write essays in response to the above, and they also raise a host of new issues: Who are actors and entities, what are markets?   What is the role of intrinsic versus extrinsic motivation?  Do theories readily apply across various contexts — e.g., across different types of organizations?  Where is mainstream economics versus more heterodox approaches?  Etc.  The responders include Elinor Ostrom, Bruno Frey, John Roberts, etc.  And, Posner then in turn responds to these comments.

Highly recommended.

Written by teppo

March 19, 2010 at 6:08 am


First, thanks to Fabio and others for the introduction.  Jason is a tough act to follow….

I’ll take Fabio’s bait on the “Indiana School” of institutionalism (but not on the rankings).  There’s no doubt that there was a critical mass of institutionalists here when I started–and I would add Ethan Michelson to the list, whose paper on the translation and indigenization of legal forms is a great example of where diffusion research is heading.  We were all well imprinted by the time we arrived in Bloomington, but I do think we pushed each other in useful directions, and will continue to in the coming years.

As the comments to Fabio’s post pointed out, the “Bloomington school” is the more well-known of the Indiana institutionalisms, especially with Lin Ostrom becoming a Nobel Laureate.  (I learned that you can’t technically call the Economics prize a “Nobel Prize.”)  This raises the question of what the relationship is, or could/should be, between the various institutionalisms.

Lots of others have considered the linkages and disjunctures between organizational neo-institutionalism and rational choice/economic institutionalism much more comprehensively than I can.  Suffice it to say that while both are middle-range theories of social order, they differ a lot in epistemologies, assumptions about collective action, orientations to efficiency, etc.  Yet perhaps just by virtue of sharing a name, some horse-racing and borrowing occurs across the two literatures.  (I made my own foray into this genre here, and some weak ties to the “Bloomington school” led to further engagement.)  My guess, however, is that the organizational neo-institutionalists have paid a lot more attention to the rational choice and economic institutionalists than vice versa.  (Has anyone tried to document this sort of thing?  One great polemical piece by Akos Rona-Tas and Nadav Gabay comes to mind.)  Regardless of the reasons for this (of which there could be many) and notable exceptions (of which there are several), the result seems to me to be that organizational neo-institutionalists are pretending to be in a conversation, but there’s no real conversation partner there. 

Is it worth continuing that conversation, or should organizational neo-institutionalists focus on the task of developing their own theoretical language and apparatus, where concepts like “field overlap,” “settlement,” and “translation” become more central than “transaction costs” and “second-order collective action problems?”  With an onslaught of handbooks of neo-institutionalism and some notable agenda-setting papers of late, it seems to me that sociologists are trending toward playing their own game–that is, carving out a unique space for organizational neo-institutionalism.  I think it’s a good move, so long as we don’t wall ourselves off or return to oversocialized conceptions of action or byzantine Parsonian exercises.

Over the coming weeks, I’ll try to share a few ideas about organizations that have come up in my work on regulation, global standards, and “corporate social responsibility” for labor and the environment.

Written by timbartley

February 3, 2010 at 8:28 am

congratulations: hoosier style!

Once again, congratulations to Indiana faculty member Elinor Ostrom on winning the Nobel Memorial prize in economics. Photograph of the prize banquet, from the SF Gate website. Also in the photo is Jack W. Szostak, who won the prize in medicine.

Written by fabiorojas

December 12, 2009 at 3:40 am

three cheers for indiana!

The Nobel prize news today is encouraging. It’s clear that this is a good prize. You should definitely read Teppo and Sean’s informative responses. I’ll take a moment to also congratulate my colleague Lin Ostrom for continuing the tradition of excellence at Indiana. She joins three other Hoosiers who have won the Nobel prize: James Watson of DNA fame and biologists Salvador Luria and Herman Muller. Congrats!

Written by fabiorojas

October 12, 2009 at 6:03 pm

Posted in academia, fabio

oliver williamson, the nobel prize and organization theory

So, beyond the seminal contributions of his work (which O&M will undoubtedly discuss), here’s why Oliver Williamson’s Nobel prize in economics is also a huge win for the fields of organization theory, strategic management and organizational sociology:

  1. Many of Williamson’s articles (including highly cited ones) are published in organization theory, strategy and sociology journals: Administrative Science Quarterly, American Journal of Sociology, Strategic Management Journal, Academy of Management Review, etc.
  2. Arguably the seminal piece of economic sociology, Granovetter’s 1985 article, is a direct reaction to Williamson’s work.  Even though Granovetter’s piece is a critique of transaction cost economics, nonetheless I think critiques will also receive indirect attention (and then, who knows?).  Furthermore, both Granovetter and Williamson have highlighted the need for a meaningful integration of organizational economics and sociology, something that I think is desperately needed (no matter what some people think).
  3. Williamson’s work has also been criticized heavily in management, for example by Ghoshal and Moran, and I think this debate is healthy and important (though I largely side with Williamson).
  4. Many of Oliver Williamson’s students are doing outstanding research in strategy and OT departments at business schools.  Off the top of my head, the following come to mind: Nick Argyres, Kyle Mayer, Jackson Nickerson, Joanne Oxley, and many others.
  5. Finally, more substantively, questions of organizational boundaries ought to be a central issue in any organization theory.  For example, questions of organizational capability are intimately tied with questions of organizational boundaries (plug: this was part of the impetus for this upcoming, pdf, Organization Science special issue.)

Overall, Williamson was long due for the award.  And, for what it’s worth, I think Elinor Ostrom was also a beautiful choice.  It’s fantastic to see scholars awarded for work that is so directly linked to organization theory.

Update: Time Magazine columnist Justin Fox is keeping track of the reactions across the blogosphere.

Written by teppo

October 12, 2009 at 3:59 pm

economists are just sociologists with good math skills? welcome to the club!

Over at Econlog, Bryan Caplan finds it hard to say what is “economics” when economists produce research that has little direct connection to classical economic questions about incentives and trade-offs. These days, you’ll find economists studying things such as weight, happiness psychology, and AIDS transmission – and producing non-economic answers. In the end, he realizes that economists have begun to drop their ties to pointless academic models and started focusing on real problems. And that’s a good thing! The community of knowledge is always improved when smart people use their tools for addressing important issues.

At the end, Bryan considers how economics might be the science of society – until he realizes that there already is a science of society! It’s called sociology:

Unfortunately, this puts me in an awkward position.  There’s another field that already sounds like “the all-encompassing study of the social world”: sociology.  Not only does sociology have lower status than economics; with honorable exceptions, it’s also well-stocked with academics who aren’t fond of economics.  Tactically, then, it would be foolish to start calling ourselves “sociologists.”  If we were picking names from scratch, though, “sociologists” is exactly what modern economists ought to proudly call ourselves.

Give in to the dark side, Bryan! Let your inner sociologist come out!

On a more serious note, Bryan’s post raises questions about the economics profession and its boundaries. Here’s a thumbnail sketch of modern economics and its relation to other disciplines:

Economic theories
Yes No
Economic topic  Yes traditional economics economic history, economic sociology, management, applied stats
No applied micro, rational choice in other disciplines other social sciences, “renegade” economists

A massive simplification, but it captures important stuff. Until the 1970s, nearly all mainstream economists were stuck in the upper left corner. Then, Becker, Downs, Olson, and others started producing economic analysis of non-commercial topics (e.g., fertility, voting, etc.) Now it was cool to move into the lower left box.

In the 1990s, you saw two new developments that made the right hand side of the table cool. First, economic sociology began to flower as a distinct specialty, inspired by earlier work by Granovetter, Swedberg, Baker, and others.  Second, economists minimized the theory and just did very careful statistics on various non-economic topics. This is embodied in the work that Caplan cites (e.g., Wolfers on happiness, or Ostrom on AIDS transmission). Aside from the boilerplate “life is always about trade-offs,” there’s almost nothing economic at all. For example, one of Ostrom’s big arguments is that AIDS transmission runs along transportation routes in Africa.

What do we do now? Abolish the boundaries between fields? I’m in favor of that. Sociologists and economists can learn a lot of good stuff from each other, but I doubt it will happen. There’s seems to be a lot invested in keeping the boundaries well guarded. The “applied micro” folks find it really convenient to pretend that sociologists haven’t discovered anything of importance on topics like marriage or income, while sociologists believe that they are the noble alternative to evil conservative math-bots. Until that changes, economists will bravely go where others have gone before and the sociologists will continue charging at windmills.

Written by fabiorojas

June 11, 2009 at 6:00 pm

the future?


Here’s three sites, other than orgtheory, to help you keep track of the future:

Written by teppo

November 29, 2007 at 5:14 pm

Posted in culture, teppo

enron for kids


If you're like me, you're looking for a way to break the Enron story to your children, but you're just not sure how to do it. No fear, BusinessWeek provides two kid-friendly allegories to explain "corporate fraud" to tots. From Yale's Jeffrey Sonnenfeld:

Once upon a time in the land of Enron, there was a king named Ken — well, actually, he wasn't a king, but he thought he was. He had a friend, at least we think he was a friend, who was a prince named Jeff. King Ken and Prince Jeff ruled over the land of Enron. In this land they made…well, they made money for themselves. What else did they make? Not much else. However, this isn't what they told the people of the land of Enron. They told the people that they were making lots of electricity and other invisible stuff. We don't know how to make electricity and other invisible stuff, and neither did they….

And that is the story of the land of Enron. The lesson is that you should not trust someone who pretends to be a king and promises he can invisibly turn little piles of gold into gigantic piles of gold using hocus-pocus, imaginary islands, and famous friends.

Truth on the Market's Bill Sjostrom provides a more concise story:

Enron hired Rumplestiltskin….to turn straw into gold. Unfortunately, the king of Enron and his subjects consciously ignored the fact that Rumplestiltskin is a fairy tale and that it’s really not possible to turn straw into gold.

That's what I've always thought. But I still hear dissenters who argue that the only thing Enron's executives were guilty of was taking too much risk. At some point, I'd like to hear a legal scholar tell me what the clear-cut difference is between excessive risk and fraud. Intuition tells me that there is one.

Written by brayden king

June 13, 2006 at 8:29 pm

Posted in brayden, current events