OLD AND NEW INSTITUTIONAL ECONOMICS: TEST

• Please answer 2 questions
• Read the questions carefully. Before answering the question, spend a few minutes to make some brief notes.
• Only authorised dictionaries should be used during the examination.
• If you require more writing paper or have any queries, please raise your hand.
• Please allow sufficient time to complete both questions (one hour for each question).

• Students will not be allowed to leave the room 15 minutes before the end of the examination. If you have any spare time, check over your answers.

1. What are the key themes of institutional economics? Explain the main differences between old and new institutional economics.

2. Using examples, discuss the following terms:

• the knowledge problem;
• the information paradox;
• bounded rationality;
• the principal-agent problem;
• freedom.

3. Why are institutions important for the working of the economy? Discuss the different types of institutions. Please give examples.

4. How is social order structured? Giving examples, outline their principles, strengths, limitations and moral values.

5. What are property rights? How do the different schools theorise property rights?

6. What are the functions of competition? Examine the different approaches to the market process.