Prize Lecture, December 8, 2009 by Elinor Ostrom
http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2009/ostrom_lecture.pdf
The humans we study have complex motivational structures and establish diverse private-for-profit, governmental, and community institutional arrangements that operate at multiple scales to generate productive and innovative as well as destructive and perverse outcomes (North 1990, 2005).
A core effort is developing a more general theory of individual choice that recognizes the central role of trust in coping with social dilemmas.
Institutional Analysis and Development (IAD)
A core effort is developing a more general theory of individual choice that recognizes the central role of trust in coping with social dilemmas.
‘Polycentric’ connotes many centers of decision making that are formally independent of each other. Whether they actually function independently, or instead constitute an interdependent system of relations, is an empirical question in particular cases. To the extent that they take each other into account in competitive relationships, enter into various contractual and cooperative undertakings or have recourse to central mechanisms to resolve conflicts, the various political jurisdictions in a metropolitan area may function in a coherent manner with consistent and predictable patterns of interacting behavior. To the extent that this is so, they may be said to function as a ‘system’.
(V. Ostrom, Tiebout, and Warren 1961: 831–32)
2. positions they hold (e.g., first mover or row player);
3. set of actions that actors can take at specific nodes in a decision tree;
4. amount of information available at a decision node;
5. outcomes that actors jointly affect;
6. set of functions that map actors and actions at decision nodes into intermediate or final outcomes; and
7. benefits and costs assigned to the linkage of actions chosen and out comes obtained.
The IAD framework is intended to contain the most general set of variables that an institutional analyst may want to use to examine a diversity of institutional settings including human interactions within markets, private firms, families, community organizations, legislatures, and government agencies. It provides a metatheoretical language to enable scholars to discuss any particular theory or to compare theories.
A specific theory is used by an analyst to specify which working parts of a framework are considered useful to explain diverse outcomes and how they relate to one another. Microlevel theories including game theory, microeconomic theory, transaction cost theory, and public goods/common-pool resource theories are examples of specific theories compatible with the IAD framework. Models make precise assumptions about a limited number of variables in a theory that scholars use to examine the formal consequences of these specific assumptions about the motivation of actors and the structure of the situation they face.
To specify the structure of a game and predict outcomes, the theorist needs to posit the:
1. characteristics of the actors involved (including the model of human choice adopted by the theorist); 2. positions they hold (e.g., first mover or row player);
3. set of actions that actors can take at specific nodes in a decision tree;
4. amount of information available at a decision node;
5. outcomes that actors jointly affect;
6. set of functions that map actors and actions at decision nodes into intermediate or final outcomes; and
7. benefits and costs assigned to the linkage of actions chosen and out comes obtained.
The internal structure of an action situation. Source: Adapted from E. Ostrom, 2005: 33.
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