The article briefly introduces Hans Albert and the basic elements of his critique of neoclassical economics as a form of ‘model Platonism’. The two most important elements of his general methodological critique of economics – namely the institutional vacuum inherent in much economic modelling and its unrealistic assumptions about behaviour – are introduced. It is argued that these specific critiques have been taken up with varying degrees of success in areas of economic research such as institutional economics and in behavioural and experimental research programmes. However, the fundamental methodological gist of his critique remains as pertinent to mainstream economics as it was when originally formulated. The influence of ‘model Platonic’ thinking remains pervasive in academia and also in public policy.

This article is a translation of the original German text of Hans Albert's 1963 article titled ‘Modell-Platonismus. Der neoklassische Stil des ökonomischen Denkens in kritischer Beleuchtung’, in F. Karrenberg and H. Albert (eds.), Sozialwissenschaft und Gesellschaftsgestaltung – Festschrift für Gerhard Weisser, Berlin: Duncker und Humblot, 45–76. The enduring relevance of Hans Albert's critique together with an introduction to the author as one of Germanys most distinguished philosophers of science can be found in Arnold and Maier-Rigaud (2012) also in this volume.

Economists have been investigating the link between institutions and economic performance for several years. While econometric studies of this link have flourished, they are of limited use in understanding the causal mechanisms making some institutions responsible for economic performance. Several works using game theory and akin to the ‘new institutional economics’ have entertained the goal of developing micro-explanations of the institutions–performance link. Because game theory focuses on individuals’ actions and beliefs, game-theoretic studies of institutions are thought to oppose more ‘structuralist’ explanations that downplay the role of individual agents and put more emphasis on the importance of social (or ‘macro’) structures. This paper demonstrates that this claim is misconceived, as the micro-explanations produced by game-theoretic models must assume already existing macro-structures. Institutions produce downward effects, shaping each agent's action. Moreover, in a game-theoretic framework, macro-structures are constitutive of individual agency since, without them, agents would often be unable to choose. I illustrate this claim with the example of Avner Greif's study of the role of cultural beliefs in the economic organisation of medieval societies.

This paper investigates the relationship between judicial resources and individuals’ trust in the justice system. We argue that the justice budget is likely to have a positive and significant impact on individuals’ trust in justice, thanks to its role as a signal when individuals face uncertainty regarding the judicial environment. We test this hypothesis empirically using three different budget-related variables: the justice budget per incoming case, the number of magistrates and the intensity of legal aid. Across our three regressions, we find a positive and significant correlation between judicial resources and individuals’ declared trust in the justice system. This positive relationship is robust to the introduction of socio-demographic, cultural, institutional and economic control variables. We finally offer empirical support to the intuition that the effect of the justice budget on trust in justice is likely to be greater when individuals are more satisfied with the level of democracy in their country.

Economic experiments carried out in the computer laboratory seldom account for broader real-world contextual variables that affect humans as learning and norm-adopting individuals. The here presented ‘within-culture across-country’ design of a standard trust experiment reveals an interesting phenomenon which most probably is related to the context that people live in: South African communities expressed extremely low trust while participants from Namibia exhibited high trust, but low reciprocity, although both share the same ethnic background. The country effect between the two regions remained large even after using a matching estimator to substantiate that these differences were not driven by sample selection bias. Qualitative evidence from the study area suggests that corrupt local institutions have led to lower trust in South African communities while participants in Namibia seemingly applied a deep-rooted behavioural norm of the Nama society which they perceived to be appropriate for the exchange in the experiment.

This paper examines in depth one of the potential causes of the low performance of foreign aid; in particular, the role incentive structures within international donor agencies could play in leading to ‘a push’ to disburse money. This pressure to disburse money is termed as the ‘Money-Moving Syndrome’ (MMS). The theoretical analysis in this paper relies on the principal–agent theory to explore how donor agencies' institutional incentive systems may affect the characteristics of an optimal and efficient incentive contract and thus give rise to the MMS. The basic framework of the principal–agent theory was innovatively adapted to fit the organizational settings of donor agencies. The model concludes that the extent to which a performance measure based on the amount of aid allocated within a specific period of time would lead to the MMS and affect aid effectiveness depends on the level of ‘institutional imperatives’, the degree of aid agency's accountability for effectiveness, the level of corruption in recipient countries and the degree of difficulty to evaluate development activities.