North, Douglass Cecil (Born 1920)

Abstract

A pioneer of the New Institutional Economics, Douglass North has built upon the property rights and transaction cost approaches of Coase and others to explain economic growth in terms not of changes in technology and productive factors but of institutional and organizational change. His most recent work stresses the need to integrate insights from cognitive science into the examination of the interplay among belief systems, institutions, and economic performance. Institutions reduce the uncertainties that would otherwise overwhelm cognitive capacity in complex social situations, but the resulting bias in our beliefs can lead to the persistence of inefficient institutions.