Robust Institutional Design
Robust Institutional Design
What Makes Some Institutions More Adaptable and Resilient to Changes in Their Environment Than Others?
Institutions are designed to alter human behavior. To remain effective over time, institutions need to adapt to changes in the environment or the society the institution is meant to regulate. Douglas North referred to this property as adaptive efficiency and suggested the need for a model of how institutions change to remain effective. This essay contributes to a theory of adaptive efficiency by relating it to the burgeoning literature in robust system design. It reviews five models of institutional change, paying particular attention to each model’s ability to explain institutional adaptation. It isolates three common structural features of a robust, adaptive institutional system: diversity, modularity, and redundancy. It illustrates the theory with a brief application to federal systems, and closes by describing some open research questions relating to institutional adaptive efficiency.
Keywords: Strüngmann Forum Reports, adaptive efficiency, complex adaptive systems, diversity, institutional dynamics, institutional design, institutional failure, modularity, redundancy, robustness, systems theory
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