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Networks underlie notable cases of rapid development without democratic institutions, a phenomenon known as crony capitalism that has two distinctive features: (1) dispensation of selective privileges, and (2) social connections among beneficiaries. This paper advances a formal theory that explains how crony networks can induce large-scale effects that can both propagate risk of predation and incentivize private protection to withstand it. Dense networks that activate both relational mechanisms translate into aggregate outcomes wherein governments respect property rights for favored parties. From formal theory, I derive equilibrium predation conditions for a computational model that examines how variable network structures impact the number of protected privileges. A statistical analysis of computer simulations lends support for the posited relational mechanisms that scale up protection in successful cases of crony capitalism.

Scholarly consensus that social ties resolve social dilemmas is largely predicated on common knowledge of networks. But what happens when people do not know all relevant social ties? Does network uncertainty translate into worse outcomes? I address these concerns by advancing the notion of a Network Estimation Bayesian Equilibrium to examine cooperative behavior under different epistemic conditions. When networks are common knowledge, I find that all possible outcomes of an original cooperation game can be realized in equilibrium, albeit with a higher likelihood of defection for more connected players. Variable knowledge of the network also has a distributional impact. With incomplete network knowledge, it’s possible to observe reversed equilibrium behavior when more connected players actually cooperate more often than less connected ones. In fact, aggregate network uncertainty in some social contexts incentivizes more mutual cooperation than would be the case with common knowledge of all social ties.

Typical accounts of the ability of social networks to enable collective action focus on either whole group or individual advantages. Adding an intermediate perspective, this paper advances a core notion of strategic embeddedness that applies to social interactions involving a subset of society. Strategic embeddedness is modeled with a game-theoretic approach that places an otherwise isolated game into a broader social structure. To facilitate a comparative institutional analysis of formal and informal mechanisms, this paper advances a complementary notion of the cooperative value of a network to evaluate the maximum payoffs possible under various network structures that define the social context of two-person cooperation games. A formal analysis indicates that decentralized network structures can maximize this cooperative value: under some conditions, these are both optimal and efficient structures that can effectively substitute for anonymous public enforcement mechanisms. In conditions where private enforcement is relatively ineffective vis-à-vis a public rule of law enforcement mechanism, then hierarchical network structures are shown to be optimal but inefficient. In general, more connectedness or a higher network density does not readily translate into more cooperation because when most players are connected to the rest of society, the added value of social networks diminishes in the absence of extraneous rules to discriminate among players with common social connections.

This chapter discusses a conceptual framework that clarifies the nature and importance of context in social scientific research. It first explains how context fits into survey analysis, then addresses major problems that hamper use and collection of contextual data: vague or incomplete conceptual definitions of “context” and lack of methodological guidance to collect and analyze contextual data. It suggests that systematic research and cumulative knowledge on contextual effects are constrained by two factors: the lack of standardized contextual variables across surveys and sporadic empirical inquiries. Finally, it outlines directions for future research with an eye toward advancing contextual data collection and analysis as well as ascertaining the impact of context on public opinion and political behavior. It presents statistical approaches to provide a blueprint for explicit measurements and analysis of contextual data and considers the need to modify conventional sampling techniques to capture relevant contextual variability.

How do comparativists incorporate networks into their studies? What is the utility of network analysis to the subfield of comparative politics? These are timely questions, because the subfield of comparative politics has long recognized the importance of various relational phenomena but is only beginning to pay systematic attention to political networks proper. To answer these questions, this chapter reviews network-related approaches embedded in studies of collective action and contentious politics, political economy, and clientelism. It offers a prospective review of major themes in comparative politics that are essentially relational and hence ripe for network analysis. The chapter concludes with a brief discussion of methodological challenges to enable comparative analysis across countries, which is an ultimate goal to bring a truly comparative dimension to relational perspectives on domestic politics.

This paper provides a working definition of polycentric orders as a governance system that allows overlapping jurisdictions and a certain degree of autonomy to consumers of public goods. The defini...

Changes in formal institutions do not always affect economic outcomes. When an industry has specific technological features that limit a government's ability to expropriate it, or when the industry is able to call on foreign governments to enforce its de facto property rights, economic agents can easily mitigate changes in formal institutions designed to reduce these property rights. We explore the Mexican oil industry from 1911 to 1929 and demonstrate that informal rather than formal institutions were key, permitting oil companies to coordinate their responses to increases in taxes or the redefinition of their de jure property rights.

This article employs previously unused data sources and techniques in order to estimate labour productivity and total factor productivity in the Mexican cotton textile industry over the period 1850–1933. Our findings indicate: (1) substantial productivity growth prior to the Porfiriato; (2) rapid productivity growth throughout the Porfiriato; (3) a swift, though incomplete, recovery from the Revolution during the 1920s; and, (4) an insignificant impact on productivity from the Great Depression. We also find evidence that the large, joint stock, limited liability firms that were founded during the Porfiriato had higher levels of total factor productivity than privately owned firms, but only for a short period of time, which suggests that these firms might have been sub-optimally large. Our results also indicate that labour markets in Porfirian Mexico were efficient. This suggests that manufacturers may not have had the monopsony power in labour markets that the literature indicates.

What is the relationship between political instability and economic growth? This article examines this question using insights from the new institutional economics applied to a canonical case: revolutionary Mexico. The authors argue that investment and growth during and after the revolution were less affected by political instability than one might predict based on the extant theoretical and empirical literature. They find that while investor expectations, output, and productivity were sensitive to the interdiction of factor and product markets during the years of intense revolutionary violence (1914-17), the periods of political instability before (1910-13) and afterward (1918-34) had relatively minor effects on investor confidence, investments in new plant and equipment, rates of entry and exit by firms, industrial structure, and productivity growth.

All governments – stable and unstable – face a commitment problem: if they are strong enough to arbitrate property rights, they are also strong enough to confiscate them. If the population does not believe that the government will refrain from exercising its power, then it will not invest. If there is no investment, there will be little economic activity, and there will be insufficient tax revenues to sustain the government. The commitment problem is essentially a problem of contract enforcement. In a stable political system, a sovereign government offers property rights protection in exchange for some kind of benefit, typically a stream of tax revenues, from the holders of those property rights. The government and the asset holders assume contractual obligations, much in the same way that any two individuals or corporate bodies can. In a contract between two private parties, of course, the government, typically through the court system, ultimately serves as the third-party enforcer of the contract. A thorny problem arises, however, when the government is itself a party to the contract: the government has a monopoly over the enforcement of property rights but will only enforce those rights when it is in its interest to do so. Even if there is a promise of full enforcement, a sovereign government will be tempted to break it afterward. Private actors can, of course, anticipate government opportunism and therefore choose to invest less or not at all.

In the previous chapter we explored how, as a theoretical matter, governments and some subgroup of asset holders can create an economic system in which property rights are specified and enforced as private goods. We also explored how the implicit contract between the government and these select asset holders can be made credible via the creation of a coalition with a third group, which receives a stream of rents from the asset holders and provides the government with crucial political support. Finally, we explored why the property rights system laid down by such a coalition might be impervious to changes in the identity and ideology of the government. Empirical reality is, of course, inevitably messier than any model of it. In order to make models tractable, it is necessary to assume that the actors are behaving as if they are playing a game whose rules and strategies are common knowledge. In the real world, however, it is often the case that some actors have a good sense of the game at hand, while others do not. (Indeed, casual empiricism suggests that many actors in social situations do not even know that there is a game.) Even those who ultimately figure out the rules of the game and the strategies for winning do not start out with that knowledge. They learn the game as they play.

The Companion lays out a comprehensive history of the field and, in five additional parts, it explores public choice contributions to the study of the origins of the state, the organization of political activity, the analysis of decision-making in non-market institutions, the examination of tribal governance and to modeling and predicting the behavior of international organizations and transnational terrorism.