Subjective Diversity and Social Learning: A Cognitive Perspective for Understanding Institutional Behavior 1

This paper deals with a controversial problem in the economics of institutions: how do regularities emerge and evolve out of the social interaction of various agents? Referring to arguments developed in a previous work (Rizzello and Turvani 2000) in which the Austrian Economies' views about the spontaneous emergence of institutions is connected to and enriched by recent findings in the cognitive sciences, the authors here extend the institutional-cognitive approach by incorporating the social cognitive theory of Albert Bandura. Accordingly, rather than being described as 'instruments' for social coordination, institutions are depicted as 'structures' emerging from the subjective process of generation of knowledge within a social context. Institutional behavior, its emergence and evolution is thus anchored to the mechanisms creating subjective diversity and those producing social learning.