Institutional Economics


Course Objective

At the end of the course the student is able:
- To understand what institutions are and how institutions impact the
behaviour of economic actors.
- To understand the institutional aspects of microeconomics in general,
i.e. how effective institutions can stimulate the functioning of markets
and decrease market failures such as market power, imperfect
information, externalities and public goods.
- To situate the New Institutional School within the broader context of
the history of economic thought.
- To think conceptually, in terms of theory, analyzing questions from
different perspectives and identifying links between seemingly different

Course Content

All economic activity takes place within a framework of institutions
that constrain individual behavior and thereby affect resource
allocation, income distribution and economic growth. This course
introduces recent approaches in the field of ‘New Institutional
Economics’. The course consists out of three parts. We begin with
studying methods and fundamental concepts (what are institutions,
property rights, transaction costs, agency costs, information costs,
power, etc.). Next, we analyze the development of the institutional
environment, or ‘rules of the game’, that guide individual behavior.
These are both formal, explicit rules (like constitutions, laws and
property rights) and informal, implicit rules (like social conventions
and norms). We conclude the course by studying specific institutional
arrangements with applications to individuals, markets, firms and the
State (e.g., marriage, money, trust, speculation and herd behavior,
morality and corruption).

Teaching Methods

Lectures + Tutorials

Method of Assessment

- Exam (50%)
- Paper (50%)
- Seminar assignments (pass/fail)


A selection of chapters from Samuel Bowles (2006) Microeconomics:
Behavior, Institutions and
Evolution and a reader containing a selection of seminal papers.

Target Audience

Second year PPE students

Additional Information

Please note that participation in the seminars is mandatory.

Custom Course Registration

There is a slightly different enrollment procedure for this module. The standard procedure of the Faculty of Humanities has students sign up for (i) the module, (ii) the form of tuition (lecture and/or preferred seminar group), and (iii) the exam. However, for this module the instructor will assign the students to the seminar groups. Therefore, students should sign up for (i) the module, (ii) lecture and (iii) the exam, but not for the seminar groups.

Recommended background knowledge

Mandatory courses PPE specialization Track 3: Economics

General Information

Course Code W_JSM_218
Credits 6 EC
Period P5
Course Level 200
Language of Tuition English
Faculty Faculty of Humanities
Course Coordinator dr. R.I. Luttens
Examiner dr. R.I. Luttens
Teaching Staff dr. R.I. Luttens

Practical Information

You need to register for this course yourself

Last-minute registration is available for this course.

Teaching Methods Lecture, Seminar*

*You cannot select a group yourself for this teaching method, you will be placed in a group.

Target audiences

This course is also available as: