Custom is an integral part of the institutional matrix of modern economies. Market processes hinge crucially on custom, which in turn affect these processes. The book proposes a theory of custom that emphasizes the motivational force that arises from the individual's striving for coherence and justification. It depicts custom as comprising habitual, cognitive, and emotional aspects and explains that market transactions rely on customary entitlements and obligations. The motivational force of custom emerges from a preference for regularity and a desire for coherence that tie cognition, emotion, and action together. The view is applied to the theory of property, the theory of the law, the theory of the firm, and the problem of the division of labour and the conditions under which that division of labour is better organized by the firm or by the market.

ABSTRACT. This note gives a fairly complete statistical description of the Hodrick-Prescott Filter (1997), originally proposed by Leser (1961). It builds on an approach to seasonal adjustment suggested by Leser (1963) and Schlicht (1981Schlicht ( , 1984. A moments estimator for the smoothing parameter is proposed that is asymptotically equivalent to the maximumlikelihood estimator, has a straightforward intuitive interpretation and is more appropriate for short series than the maximum-likelihood estimator. The method is illustrated by an application and several simulations.Acknowledgement. I thank Johannes Ludsteck for several helpful suggestions and for providing the Mathematica Package (Ludsteck, 2004) used for the computations in this paper.

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Customs and institutions affect and are affected by economic relations and processes. The two-way interaction is particularly important in studying history where the scale of the temporal canvas ensures that very few variables can be treated as parametric. This paper assesses the methodology which attempts the task. In particular it examines the problem of endogenizing customs, evaluates claims for the optimality of institutions, and also comments on the interpIay between structural and inertial forces. Recent work in the new institutional economics stresses structural forces, while traditional history emphasizes inertial forces, but on closer analysis these are shown to be complementary.