Rational Behaviour and the Design of Institutions

The structures of the world’s national and international, political and economic institutions have largely resulted from intuitive and ad hoc organization with reforms taking place on a costly trial-and-error basis. This book offers a comprehensive evaluation of the tools which can be used for a more rational and formal approach to institutional design.

As new institutions and, indeed, new national governments are being formed and developed all the time, there is a considerable need for formal models that can facilitate their design. This book offers conceptual approaches and theories that shed new light on how various social and political institutions can emerge as the outcome of goal-directed rational behaviour. The author provides tools for evaluating existing institutions and for setting up new ones, demonstrating the applicability of decision and game theoretic tools, social choice theory and mechanism design to the construction of political and economic institutions. Using these approaches he particularly discusses the practical implications for the design of institutions in the European Union.

This important book will be welcomed by students and scholars interested in government and political science, rational choice theory, methodology in the social sciences, and the microeconomics of rational behaviour.