Janet Tai Landa

A Theory of the Ethnically Homogeneous Middleman Group: An Institutional Alternative to Contract Law

Central to the economics of property rights-public choice theory1 is the recognition that laws and institutions are important in promoting the efficiency of an economy. One of these institutions is the law of contracts.

Personal versus impersonal trade: The size of trading groups and contract law

The economic model of perfect competition depicts exchange as occurring between anonymous partners. Trade is anonymous because buyers and sellers are indifferent as to the identity of their trading partners. This characteristic of competitive exchange, sometimes called Jevons’ (1871) “Law of Indifference,” is implicit in the idea that commodities are homogeneous and traders care only about price.

Bounded Rationality of Economic Man: Decision Making under Ecological, Social, and Institutional Constraints

Neoclassical economic theory is implicitly based on the assumption of atomistic individuals living in anonymous societies, unconnected to other individuals by kinship, ethnic, friendship or other social ties. Furthermore, neoclassical economic theory is based on a model of rational, omniscient individuals operating in a zero transaction costs world of perfect markets without institutions. In the last forty years or so, New Institutional Economics (NIE) have criticized Neoclassical economics and have incorporated concepts of bounded rationality, transaction costs, and uncertainty. Neoclassical economic theory has also been challenged by behavioral studies of decision-making showing that cognitive constraints lead to various decisional biases and judgmental errors. However, similar to neoclassical economic theory, behavioral models of risky choice have largely ignored environmental variables such as social structure (group size, group composition, etc.) and institutional infrastructure (the formal and informal ‘rules of the game’). In this paper, we show how social structure and institutions serve as important constraints influencing rational choice in risky situations. Wang’s experimental work shows that a famous ‘cognitive illusion’ called framing effects disappear when kinship relations, the smallness of group size, and group homogeneity are taken into account. These empirical findings are explained in a framework of ‘Bounded Risk Distribution’. Landa’s NIE theory of the ethnically homogeneous Chinese middleman group, based on fielwork, shows that in an environment characterized by contract uncertainty, hence positive transaction costs traders choose their trading partners along kinship and other particularistic basis, a phenomenon not predicted by Neoclassical theory of exchange. Our paper shows that economic and descriptive psychological risky choice theories of decision-making need to take into account the social and institutional environment: the boundly rationality of economic man is influenced by the social contexts in which he makes decisions.

Bioeconomics of some nonhuman and human societies: new institutional economics approach

New institutional economics (NIE) has been very successful in explaining the role of institutions such as the firm, money, and contract law in facilitating production and exchange in human societies. In this paper, I will show that the NIE approach, which so far has been used by economists to analyze institutions and organizations in human society, including the ethnically homogeneous middleman groups, can also be extended to explain the high degree of cooperation and coordination of activities of honeybees, ants, and schooling fish. In addition, the paper emphasize the importance of identity in nonhuman and human societies in eliciting cooperation and in detecting cheaters or fakers. This paper thus contribute to the integration/consilience of economics and biology by providing a more unified view of aspects of the bioeconomics of nonhuman and human societies.

The enigma of the kula ring: Gift-exchanges and primitive law and order

Abstract There is no such thing there as a free gift.1 Exchanges are peacefully resolved wars and wars are the result of unsuccessful transactions. 2 As long as ceremonial exchanges continued to take place assurance, that peace prevailed, the linked groups could continue to carry on other mutually advantageous activities, such as trade in ordinary goods …3

Ethnic voting patterns: a case study of Metropolitan Toronto

Abstract This study proposes a number of hypotheses about ethnic voting patterns. In an application of one element of the theory, ecological regressions are used to explain the proportion of the vote in Metropolitan Toronto received by ethnic (Italian, Chinese and Jewish) candidates for the Liberal, Progressive Conservative and New Democratic parties in the September 1987 provincial election. After allowing for the effects of income, age distribution and mother tongue on voting patterns, the ethnicity of the party candidate has a significant effect.

The development of trading networks among spatially separated traders as a process of proto-coalition formation: the kula trade☆

Abstract Our aim in this paper is to look at graph-theoretic and coalition-formation approaches to the development of exchange networks among spatially separated traders. In particular, we shall show: 1. (1) That decentralized trading structures involving bilateral trading with left-hand and right-hand neighbors in a connected ring can, for a certain specified spatial arrangement of traders, be more efficient in minimizing total transportation costs of goods than a centralized market-trading structure; and 2. (2) That an adaptation of a model of sequential proto-coalition formation proposed by Grofman (1982) can be used to predict trade linkages among traders in the Kula ring of the Massing region of Papua New Guinea and to account for the development of the inner ring structure. We shall also briefly discuss how graph theory can be used as a tool to explicate the underlying market structure of a given network of traders.

Why Ants Do but Honeybees Do Not Construct Satellite Nests

Synopsis: Ants and honeybees are both social insects that share many characteristics in common. But there is a fundamental difference between ants and bees. Ants can and do construct main nests with satellite nests, whereas bees construct only a main nest with no satellite nests. In this paper we explain the difference between the socio-economic organization of ants and bees: ants can identify nest-mates from satellite nests because ants leave odor trails connecting main nests to satellite nests so that fellow nest-mate from satellite nests smell the same. Bees, on the other hand, cannot leave odor trails in the air, and hence are unable to identify bees from another nest; bees from another nest with different pheromone smells are stung to death by guard bees in the main nest.

Hadley v. Baxendale and the Expansion of the Middleman Economy

THE famous 1854 English contract case of Hadley v. Baxendalel has long been recognized as a landmark decision in the history of English contract law. Before that decision was handed down, the law of contract damages was in its infant state, so that the jury was given wide discretion in the choice of damage level. Contract damage was better described as a matter of fact than as a matter of law, so that the operation of the contract system as a whole was covered with a veil of uncertainty that made any evaluation of its operation difficult to achieve. With Hadley, a general principle, often loosely described as one of foreseeability, was crystallized.

The Co-evolution of Markets, Entrepreneurship, Laws, and Institutions in China’s Economy in Transition: A New Institutional Economics Perspective

Since embarking on an ambitious program of economic reform in 1978, the People’s Republic of China (China) has enjoyed a degree of success in making the transition from a centrally planned economy to a market-oriented economy.1 China has enjoyed rapid economic growth at the average rate of 9.5 percent during 1980–1990, and double-digit g growth from 1993–1995.2 China’s experience during the transitional period stands in sharp contrast to the reform experience of Eastern Europe. What factors account for the difference?