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When Order Affects Performance: Culture, Behavioral Spillovers, and Institutional Path Dependence

Published online by Cambridge University Press:  25 January 2018

JENNA BEDNAR  and
SCOTT E. PAGE
JENNA BEDNAR*
Affiliation:
University of Michigan
SCOTT E. PAGE*
Affiliation:
University of Michigan
*
Jenna Bednar is a Professor of Political Science, University of Michigan, 5700 Haven Hall, Ann Arbor, MI 48109 and a member of the External Faculty, Santa Fe Institute, 1399 Hyde Park Rd, Santa Fe, NM 87501 (jbednar@umich.edu).
Scott E. Page is the Leonid Hurwicz Collegiate Professor of Complex Systems, Political Science, and Economics, University of Michigan, 1085 S University Ave, Ann Arbor, MI 48109 and External Faculty, Santa Fe Institute, 1399 Hyde Park Rd, Santa Fe, NM 87501 (scottepage@gmail.com).
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Abstract

Evidence suggests that the cultural context influences the performance of laws, policies, and political institutions. Descriptive accounts reveal that outcomes and behaviors often depend on the array of historical institutions. This article presents a multi-institutional framework that can account for those findings through path-dependent behavioral spillovers. Individuals learn equilibrium behaviors when interacting in a new institutional setting. Initially, some individuals choose behaviors that align with their behaviors in similar extant institutions, creating a cultural context that can lead to inefficient outcomes. The article shows how avoiding path dependence requires sequencing (or designing) institutions to maintain behavioral diversity. Optimal sequencing thus requires positioning institutions with clear incentives early in the sequence as well as avoiding strong punishments that can stifle attempts to break established behavioral patterns.

Type
Research Article
Information
American Political Science Review , Volume 112 , Issue 1 , February 2018 , pp. 82 - 98
Copyright
Copyright © American Political Science Association 2018 

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Footnotes

The authors gratefully acknowledge the hospitality of INSEAD during a sabbatical leave; suggestions from David Laitin, Tim van Zandt, and Jenna’s graduate student seminar in Institutional Analysis; audience members at the Priorat Conference on Political Institutions, INSEAD, Hamburg University, University of Pennsylvania, the Université de Génève, ETH-Zurich, the University of Michigan, the IMF, the Santa Fe Institute, Princeton University, UCLA, and the London School of Economics, as well as research support from the U.S. Army Research Laboratory and the U.S. Army Research Office under Contract/Grant No. W911NF1010379.

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