THE INSTITUTIONAL ANALYSIS
IN THE ENDOGENOUS PERSPECTIVE
AND ITS CASE STUDY METHOD
：The Conceptual Framework
and Methodology of CHIA
ABSTRACT
Inspired by Schumpeter’s studies on History of Analysis, this article examines the Comparative and Historical Institutional Analysis (CHIA) advanced by Avner Greif with the methods of historical study and comparative study. It covers the conceptual framework as well as the empirical methodology.
CHIA is employed to address the most fundamental questions of Institutions, which include: “Why do societies evolve along distinct institutional trajectories? Why do societies often fail to adopt the institutional structure of more successful one? How may we examine the interrelations between the implicit and informal aspects of societies’ institutions, on the one hand, and their explicit and formal aspects, on the other?” “CHIA is historical in its attempt to explore the role of history in institutional emergence, perpetuation, and change; it is comparative in its attempt to gain insights through comparative studies over time and space; and it is analytical in its explicit reliance on context-specific micro models for empirical analysis.”
According to the literatures of study and translation here in mainland China, CHIA in academic history can be traced in three different trajectories: as the latest development of Comparative Economic Systemic Analysis, as the method of institutional analysis in economics, and as an analytic framework of History of Economy, which demonstrates CHIA well combines the methods of historical studies, social sciences, and, particularly, theories of economics. When as the method of institutional analysis in economics, it could also be specific as the third stage of the New Institutional Economic History, or as the institutional analysis of Game Theory approach, one of the three approaches of modern Economics institutional analysis, or as the institutional analysis in the endogenous perspective in the view of Game Theory.
Grief develops a concept of institution out of all other concepts, which defines an institution as a system of institutional elements, including rules, norms, beliefs, and organizations, that conjointly generate a regularity of social behavior. Institutional elements of this system are man-made, nonphysical factors that are exogenous to each individual whose behavior they influence，and together these elements motivate, enable and guide individuals to follow one behavior among the many that are technologically feasible in social situations. Institutions are self-enforcing and reproductive.
CHIA advances a unified framework, which benefits from Game Theory, to studying institutions and the dynamics of institutions. In CHIA, transactions become the basic unit of analysis. “In a game-theoretic representation, the cognitive models regarding the structure of the situation, norms, and internalized beliefs are captured in the rules of the game, while behavior and behavioral beliefs are represented as strategies and the probability distributions over them. By adopting the achievements of Social Psychology and historical and cultural factors, the CHIA solves the problem of common knowledge postulate and of multi-equilibriums of classical game theory.
Regarding “institutional dynamics as a historical process”, Greif proposes an analytical approach of endogenous institutional change, which enables study on the institutional persistence in a changing environment and the institutional change in a stable environment, which benefit from two analytical conceptions, quasi-parameters and institutional reinforcing. Greif emphasizes that there is a fundamental asymmetry between institutional elements inherited from past and technologically feasible alternatives, which means history and individual agency will have common effects in the process of bringing in new institutions. Greif also mentions the influences on the institutional change brought by institutional entrepreneurs and institutional complexes.
The case study method, the empirical studying method of CHIA, combines historical and theoretical methods, as well as deductive reasoning and inductive analysis, and adopts the Falsificationism methodology. There are four stages in a case study: (1) initialing institutional analysis, identifying issues; (2) toward a conjecture, assembling the pieces; (3) forming context-specific models; (4) evaluating a conjecture through interactive, context-special analysis.
Through a review of the essence in the framework of CHIA, we can find that the CHIA has many analogies with the framework of Comparative Institutional Analysis (CIA) advanced by Masahiko Aoki in the following aspects: the contents and instruments of institutional analysis of Game Theory approach, the definition and characters of institutions, and mechanism of institutional change. This article concludes by giving a survey of exercises of CHIA and some related studies in Chinese empirical studies, and proposing an operable topic, which is to explore the general essence of the institutional change by examining the institutional changes in the property rights of the rural villages’ enterprises in China.
KEY WORDS: Institutional Analysis, Endogenous perspective, Avner Greif, Game Theory, the History of Economy, Methodology