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Journal of Evolutionary Economics

, Volume 2, Issue 3, pp 165–177 | Cite as

How do conventions evolve?

  • Robert Boyer
  • André Orléan
Article

Abstract

The paper argues that, even in the absence of bureaucratic inertia, the transition from one convention to a superior one can be blocked. Because of the self-reinforcing mechanism generated by coordination effects, the economy can be locked-in to an Pareto-inferior convention. In the framework of evolutionary game theory, convention appears to be an evolutionary stable strategy. We show that the endogenous diffusion of a superior convention is possible but requires the presence of some social or cultural differentiation in order that coordination effects can be localized. The social or cultural links provide no information about the structure of the game, but help people to coordinate themselves by providing external points of reference. We construct a model where matching between agents respects a certain localization of interactions related to social or cultural similarity. These results are used to enlighten the surprising success of japanese labor management in US and UK transplants.

Key words

Institution Convention Evolutionary stable strategy Institutional change Diffusion process 

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Copyright information

© Springer-Verlag 1992

Authors and Affiliations

  • Robert Boyer
    • 1
  • André Orléan
    • 2
  1. 1.CEPREMAPParisFrance
  2. 2.CREA (Ecole Polytechnique)ParisFrance

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