Article

 

Evolution and institutions : a cognitive perspective (p.27-45)

by

Brian J. Loasby, Department of Economics, University of Stirling (Stirling, Scotland)

Keywords : Uncertainty, Cognition, Structure, Connections, Knowledge

JEL classification : B52, D83, L22, O12

Abstract

Evolution, institutions, and organisation in economic systems rest on uncertainty and the characteristics of human cognition. All processes require structure, which influences their outcomes; every structure is a pattern of selected relationships. Cognition depends on neural connections, which are genetically derived, but not determined; institutions provide frameworks; and organizations provide routines and decision premises. Responses to uncertainty include conservatism, the adoption of other people’s rules, and experimentation; diversity extends the range of both defensive and imaginative practices on which selection can work; and the division of labour promotes diversity. Successful change requires ‘good continuity’ – a problem for transition economies.