A Cognitive Approach to Law and Economics: Hayek's Legacy

Shifting Boundaries in Economics: The Institutional Cognitive Strand and the Future of Institutional Economics

“…Integration between original, new institutionalism and Hayek's theory of the mind is only the first step in the development of CIE. CIE grounds its investigation on a theory of human nature originating from Hayek's theory of mind and improved by Veblen's instinct‐habit theory (Rizzello, ; Ambrosino, ), by Bandura's theory of social learning (Ambrosino, ) and by more recent developments in psychology, anthropology and neuroscience. This theory of human nature exhibits close connections with the theory underlying OIE in that the standard homo economicus is replaced with a multi‐dimensional human being whose socio‐cultural background strongly influences agents’ behaviour (Jensen, ; Ambrosino, , , ).…”

“…CIE applies an interdisciplinary method based on empirical and experimental research (Ambrosino, , ). Even if it is a relatively new research area, it has contributed to formulating new hypotheses on decision‐making processes.…”

“…This paper has argued that CIE could contribute to developing institutional analysis in that direction because it develops a research agenda in which, as called for by Hodgson: 1. Markets are regarded as specific institutions or systems of rules that both constrain and enable agents’ choices, so that they should be investigated like any other institution; 2. the neoclassical concept of scarcity is substituted by a relative one, particularly institutions emerging from social interaction could produce stable institutional settings that are effective and not necessarily efficient (Ambrosino, , ); and 3. rational optimization can never supply a complete explanation of human behaviour and institutions (Vanberg, ), so that an interdisciplinary approach should be applied to understand the individual cognitive processes shaping agent's behaviour. To this end, CIE applies an interdisciplinary method based on empirical and experimental research (Ambrosino, , , ).…”

“…Markets are regarded as specific institutions or systems of rules that both constrain and enable agents’ choices, so that they should be investigated like any other institution; 2. the neoclassical concept of scarcity is substituted by a relative one, particularly institutions emerging from social interaction could produce stable institutional settings that are effective and not necessarily efficient (Ambrosino, , ); and 3. rational optimization can never supply a complete explanation of human behaviour and institutions (Vanberg, ), so that an interdisciplinary approach should be applied to understand the individual cognitive processes shaping agent's behaviour. To this end, CIE applies an interdisciplinary method based on empirical and experimental research (Ambrosino, , , ). Moreover, CIE argues that the analysis of the interdependent relationship between institutions and agents characterized by heterogeneity requires a cartographic approach (Mitchell, ) aimed at understanding and describing behaviour in specific contexts (NIE yet indicates the need for a comparative approach to investigate real arrangements).…”

“…It argues that a step forward in the direction outlined by Hodgson and Stoelhorst () is today being made by Cognitive Institutional Economics (henceforth CIE). CIE is a recent research stream that has developed from cross‐fertilization among NIE, OIE and the Hayekian contributions to the analysis of economic institutions (Ambrosino, , , ). This approach represents a new view on the relationships between NIE and research areas traditionally ascribed to heterodoxy: not only can their theories dealing with the cognitive level of institutional analysis be integrated (on both theoretical and methodological grounds), they also represent a new general framework which is developing and strengthening.…”