Starts course!

“Economics of Organization” has started today! This is the course that I wanted to take because I am interested in mechanism design or game theory: the view to see human beings in a system.

In today’s course, we leaned some definition of words and summaries of famous study.

Institution: set of rules, shared conception among a set of individuals regarding their prescribed behavior.

Organizations: a group of people whose relationship is regulated by institution.

Values:
Personal traits: Abilities and preferences.
Social esteem: Others’ evaluation of one’s traits.(Traditionally neglected in economics)
Consequences: Material outcomes and social esteem.
Preferences: Valuation of consequences.
Culture: shared notion of value

Behaviors: decided by the own traits, own belief of others’ behavior, and own belief of others’ opinion (i.e. culture)


The method to calculate influence institution to productivity:
1, Define measures of institutional quality
2, Find “instruments” for these measures
3, Assume that the true relation is
Log（Y/L）=α＋βS
S＝γ＋δlog(Y/L)＋θX
X･･･because there are some variables of Y/L.(but sometimes X is trick because it correts indirectly)

Hall and Jones(1999)
1, regressing output per worker directly on instruments works well
2, conclusions robust to added instruments

Acemoglu et al(2001)
High settler mortality leads to poor performance. However the study is controversial.

La Porta et al(1999)
Foucus on preconditions for good current institutions-in particular the relationship between religion and legal system and good governance.
Look multi factors
-good governance measured by low corruption, low infant mortality or low degree of sexual discrimination
-common law countries have better governance than civil law
-Muslim countries have worse
-good government is correlated with big government