INSTITUTIONS, RULE-FOLLOWING AND GAME THEORY

Abstract

Abstract:Most game-theoretic accounts of institutions reduce institutions to behavioural patterns the players are incentivized to implement. An alternative account linking institutions to rule-following behaviour in a game-theoretic framework is developed on the basis of David Lewis’s and Ludwig Wittgenstein's respective accounts of conventions and language games. Institutions are formalized as epistemic games where the players share some forms of practical reasoning. An institution is a rule-governed game satisfying three conditions: common understanding, minimal awareness and minimal practical rationality. Common understanding has a strong similarity with Ludwig Wittgenstein's concept of lebensform while minimal awareness and minimal practical rationality capture the idea that rule-following is community-based.