This paper explores the role of artificial intelligence (AI) within economic institutions, focusing on bounded rationality as understood by Herbert Simon. Artificial Intelligence can do many things in the economy, such as increasing productivity, enhancing innovation, creating new sectors and jobs, and improving living standards. One of the ways that AI can disrupt the economy is by reducing the problem of bounded rationality. AI can help overcome this problem by processing large amounts of data, finding patterns and insights, and making predictions and recommendations. This insight raises the question: can AI overcome planning problems – could it be that central planning is now a viable option for economic organisation? This paper argues that AI does not make central planning viable at either the nation-state level or the firm level, simply because AI cannot resolve the knowledge problem as described by Ludwig von Mises and Friedrich Hayek.

Institutions matter for postdisaster recovery. Conversely, natural disasters can also alter a society's institutions. Using the synthetic control method, this study examines the effects that Hurricane Katrina (2005) had on the formal and informal institutions in Louisiana. As measures of formal institutions, we employ two economic freedom scores corresponding to government employment (GE) (as a share of total employment at the state-level) and property tax (PT). These measures serve as proxies for the level of governmental interference into the economy and the protection of private property rights respectively. To assess the impact on informal institutions, we use state-level social capital data. We find that Hurricane Katrina had lasting impacts on Louisiana's formal institutions. In the post-Katrina period, we find that actual Louisiana had persistently higher economic freedom scores for both GE and PT than the synthetic Louisiana that did not experience the hurricane. These findings imply that the hurricane led to a reduction in both PTs and GE, which indicates a decrease in the relative size of the public sector as a share of the state's economy. On the other hand, we find no impact on our chosen measure of informal institution.

Using a double-hurdle approach, we assess factors associated with the extent of participation in the rice market with data for small-scale farmers drawn from a nationally representative dataset. The results suggest that larger endowments and assets, animal farming and commercialization, and alternative off-farm income make farmers less likely to participate. Conversely, having access to credit, larger farm sizes, and being part of a farmers’ association all increase the likelihood of participation. Farms with better technological resources are also those with higher sales volumes. Further understanding market participation dynamics should prove useful for deriving evidence-based policy recommendations to strengthen this Bolivian sector.

In this article, we reconceptualize, using an extended discrete and dynamic Ostrom's classification, the specific intellectual property (IP) regimes that support geographical indications (GIs) as ‘knowledge commons’, e.g. a set of shared collective knowledge resources constituting a complex ecosystem created and shared by a group of people that has remained subject to social dilemma. Geographical names are usually considered part of the public domain. However, under certain circumstances, geographical names have also been appropriated through trademark registration. Our analysis suggests that IP laws that support GIs first emerged in Europe and spread worldwide as a response to the threat of undue usurpation or private confiscation through trademark registration. We thus emphasize the nature of the tradeoffs faced when shifting GIs from the public domain to shared common property regimes, as defined by the EU legislation pertaining to GIs. In the context of trade globalization, we also compare the pros and cons of regulating GIs ex-ante rather than engaging in ex-post trademark litigation in the courts.

This article examines Chinese immigrant engineers’ navigation in the highly flexible information technology (IT) industry in the United States and their strategies of utilizing the high-velocity labour market to their advantage. Flexible employment has grown both in prevalence and prominence in the study of the American IT industry. What flexibility theorists fail to attend to, however, is the ethnicised demission of the high-velocity labour market in the IT sector. To address this vacancy, the researcher conducted a 13-month ethnography at a leading internet-services firm in the United States and 66 additional interviews with engineers from eight leading tech companies. The ethnographic work showed that inequality that emerged within the tech firms (e.g. ‘bamboo ceilings’) disadvantaged Chinese engineers’ career development. The ‘bamboo ceiling’ stimulated Chinese immigrants to use the high-velocity labour market to normalize their job-hopping practices, in order to circumvent their career disadvantage. To facilitate their job-hopping, Chinese engineers developed university-based networks. This study concludes that, with help of their university network, Chinese immigrants became the most mobile group in the US tech industry, which further preserved the industry’s flexibility.

This article argues for the need for the empirical analysis of how firms manage repugnance and core-stigmatization. To develop our empirical perspective, we compare the work on repugnance with the existing empirical literature in management on core-stigma and argue that core-stigmatization results from the mobilized repugnance. The core-stigmatized firm faces higher transaction costs. We demonstrate, through a case-study of the strategies of MindGeek/Pornhub in the online pornography market, how transaction costs economics can explain the choice of strategies to deal with core-stigma. Under most conditions, the increased transaction costs lead to vertical and lateral integration of the firm. In a dynamic setting, rival firms might use stigmatization to prevent the entry of a new competitor. Our second case-study on the early decades of the mail-order company Sears, Roebuck, and Company illustrates that repugnance, including racial discrimination, was mobilized by competitors to block the entry of the firm into the market.

The current approach to the study of property cannot distinguish the causes of human action from the consequences of human action. It also cordons off morality thereby opening a hole in how property rights work. The scientific difficulty is that our analysis must constantly shift between the individual, their local community, and the larger polity in which both are embedded, in order to explain simultaneously different levels of consequences with different kinds of causes. The difficulty is made worse when we construct mental models without the human mind. My framework leaves the human mind in. Since Armen Alchian and Harold Demsetz, the study of property rights has had a decidedly external stance: the institution imposes itself on the individual from the outside. The problem of property rights, however, also calls for inquiry from the inside out of human agency, because in the study of property, ideas are primary.

A property right, the standard view maintains, is a proper subset of the most complete and comprehensive set of incidents for full ownership of a thing. The subsidiary assumption is that the pieces that are property rights compose the whole that is ownership or property, i.e., that property rights explain property. In reversing the standard view I argue that (1) a custom of intelligent and meaningful human action explains property and that (2) as a custom, property is a historical process of selecting actions conditional on the context. My task is to explain how a physical world of human bodies with minds that feel, think, know, and want gives rise to a custom of property with meaning and purpose. Property is primary because ideas are primary.

Williamson's legacy will be permanently, and deservedly, linked with the theory of the firm. As important, however, is his contribution to our understanding of contracting. My aim here is to describe Williamson's conception of contracting, how it differs from other approaches to contracting, and some implications of that approach for contract design and enforcement. I argue that Williamson's ‘process orientation’ – in which the main dimension along which contracts vary is the extent to which contract adjustments are effected through court ordering versus private ordering – provides alternative interpretations of some conventional contract terms but also sheds light on some otherwise puzzling contractual phenomena.

Oliver Williamson's contributions to the theory of the firm were of course seminal. Yet, they were not originally formulated to address the central question in strategic management: Why do some firms persistently outperform others in financial terms? We suggest that when Williamson did address this question, his efforts were not compelling. We also suggest, however, that with suitable adjustments, the key mechanisms in Williamson's theory can indeed usefully address this question.

More than 30 years ago, I engaged in a debate with Oliver Williamson over the theoretical structure of transaction cost economics (TCE). This debate had its origins in our conflicting views of the labor-managed firm (LMF). Williamson believed that such firms were rare due to their inefficiency while I believed they might be rare due to market failures. Here I clarify my criticisms of TCE and contrast Williamson's view of the LMF with my own approach. I discuss empirical evidence that can distinguish between these two approaches and take up Williamson's challenge to identify policy interventions that could yield net social gains.

We owe Williamson for the formal introduction of hybrid organizations as essential building blocks in ‘the institutional structure of production’. The analysis of these institutional arrangements, which culminated in The Mechanisms of Governance, provided a unified approach to the variety of setting within which transactions are embedded, opening a new perspective on a cornerstone of modern economies. This essay explores the past, present, and future of this breakthrough. First, it reviews the progressive integration of hybrids as a category of their own in the classic ‘make-or-buy’ model, inserting hybrids as an ‘intermediate’ form different from markets in that adaptation cannot be done unilaterally and different from ‘unified organizations’ in that adaptation cannot be done by fiat. Second, it shows how this initial characterization of hybrids, besides providing a coherent approach to empirical research available at the time, gave a powerful impulse to new contributions, identifying more rigorously the fundamental features of hybrids, throwing light on why firms go hybrid, and explicating the governance structure chosen. Last, it offers insights on a research program that remains a work in progress, delineating new terrains to explore and new puzzles to solve.

We develop a theory of state formation shedding light on the rise of the first stable state institutions in Bronze Age Mesopotamia. Our analysis suggests that the mix of adverse production conditions and unforeseen innovations pushed groups favored by old technologies to establish the state by granting political and property rights to powerless individuals endowed with new and complementary skills. Through these reforms, the elite convinced the nonelite that a sufficient part of the returns on joint investments would be shared via public spending and, thus, to cooperate and accumulate a culture of cooperation. Different from the main alternative theories, we stress that: (1) group formation is heavily shaped by unforeseen shocks to the returns on both risk-sharing and innovation; (2) complementarity in group-specific skills, and not violence, is key determinant of state formation; (3) military, merchant and, especially, religious ranks favored state formation and culture accumulation.

In all legal systems, possession and property are inextricably linked. Game theory captures this relationship in the Hawk–Dove game: players competing for an asset are better off when the possessor plays Hawk and the intruder plays Dove (the bourgeois strategy) so that property can emerge as a spontaneous convention. This theory has been supported by large experimental evidence with animals. This paper presents a lab experiment where possession is manipulated to study the emergence of the property convention with human subjects. We show that the highest coordination emerges when possession is achieved meritoriously and that possession induces only bourgeois coordination (never antibourgeois).

The exploitation of radio-electric spectrum bands for wireless transmission purposes has some features of the commons: it is subject to congestion and conflict without rules governing its use. The Coasean approach is to assign private property rights to overcome the tragedy of the spectrum commons. The process of assigning these rights is still centralized, with governments assigning property rights through agencies such as the Federal Communications Commission and National Telecommunications and Information Administration in the USA. We consider the possibility of self-governance of the spectrum. We use insights from the study of common pool resources governance to analyze the emergence of property rights to spectrum in a ‘government-less’ environment in which norms, rules, and enforcement mechanisms are solely the product of the repeated interactions among participants in the network. Our case study considers the spectrum-sharing arrangement in the 1,695–1,710 MHz band. Using agent-based modeling (ABM), we show that self-governance of the spectrum can work and under what conditions it is likely to improve the efficiency of the allocation of property rights.

This paper introduces and defines the concept of collective entrepreneurship. A review of the defensive single-level rent-seeking objective of traditional agricultural cooperatives is introduced followed by an analysis of recent studies documenting a shift in the objective functions of producers jointly integrating toward more multiple-level rent-seeking entities. This process of shifting from market failure-ameliorating collective action mechanisms toward rent-seeking group action organizations is labeled collective entrepreneurship. The justification for introducing this concept is based on the Olsonian premise that rational, self-interested individuals will not act to achieve their common or group interests without coercion or selective incentives.

Agriculture has seen a steady movement toward the increased use of contracts. Agricultural contracts now guide the interrelationships of parties throughout the modern production system, extending well beyond the livestock sector. With this predominance come new issues that require us to reexamine contract theory and the roles of the parties. This review examines legislation, regulations, and recent court rulings in seemingly unrelated areas that have specific relationships to the development of contracts in production agriculture: environmental law and labor law.

This paper examines the industrialization process of U.S. agriculture by examining the trends in the number of farms, the concentration of production during the last decade, and the dynamics of farm survivability, entry, and exit underlying aggregate statistics. We next examine vertical coordination as part of the industrialization process and highlight contracting in the poultry industry. The analysis provides evidence that production is continuing to be concentrated on a smaller number of farms at a relatively rapid rate, in spite of the stability in the number of farms. Although contracting clearly dominates the broiler industry, it is less prevalent in egg and turkey production, where other forms of vertical coordination are likely established.

Breeders of purebred bulls have multiple avenues to market their bulls, including consignment at public auctions associated with performance tests. Purebred breeders often have the opportunity to withdraw bulls that are eligible to sell in these auctions. We examine sales data from a public auction held in conjunction with a performance bull test in Tucumcari, NM, to gain insights on breeder decisions to withdraw bulls prior to entering the sales ring. Specifically, we use a binary logit model to identify relevant characteristics that affect a breeder's decision to withdraw a sale eligible bull from the auction.

Using farm-level panel data from the U.S. Census of Agriculture, this research examines whether hog producers with production contracts increased output more, or were more likely to survive in business over 5 years, compared with independent producers. Additionally, this research examines whether independent producers who adopted a production contract grew more than similar independent operations who did not contract. The local availability of contracts serves as an instrumental variable to address the potential endogeneity of the contracting decision. Results indicate that the use and adoption of production contracts affect farm size growth and survival differently depending on the initial size of an operation.