Rules of the Road

What are institutions? Here is a great excerpt from Geoffrey Brennan & James M. Buchanan‘s Reason of the Rules: Constitutional Political Economy (1985) on the point:

Rules of the road serve the function of allowing persons to pursue their separate and independent course, which may conflict in the absence of such rules…A set of rules may be preferred because it tolerates the coexistence of good and bad drivers on the road…[Often] all parties will be better off if they adopt a rule, any rule…[T]here may be a role for government in announcing a rule. History, however, may do as well or better—for social conventions often serve to establish the relevant rules of conduct.

A.K.

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