Evolution and Institutions: A Cognitive Perspective

Evolution, institutions, and organisation in economic systems rest on uncertainty and the characteristics of human cognition. All processes require structure, which influences their outcomes; every structure is a pattern of selected relationships. Cognition depends on neural connections, which are genetically derived, but not determined; institutions provide frameworks; and organizations provide routines and decision premises. Responses to uncertainty include conservatism, the adoption of other people’s rules, and experimentation; diversity extends the range of both defensive and imaginative practices on which selection can work; and the division of labour promotes diversity. Successful change requires ‘good continuity ’ – a problem for transition economies