Transaction Cost and Bounded Rationality Theory: Flawed, and So Ignored in Public Policy?

Tisdell, Clem (2000) Transaction Cost and Bounded Rationality Theory: Flawed, and So Ignored in Public Policy?. Discussion Paper No. 273, Department of Economics, The University of Queensland.

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Author Tisdell, Clem
Title Transaction Cost and Bounded Rationality Theory: Flawed, and So Ignored in Public Policy?
School, Department or Centre Department of Economics
Institution The University of Queensland
Report Number Discussion Paper No. 273
Publication date 2000-04-01
Subject 340100 Economic Theory
360202 Public Administration
Abstract/Summary Relationships between bounded rationality and transaction cost theory are discussed and their connection with stochastic theory of industrial evolution are considered. While these theories have their limitations, they are not flawed but have been largely ignored in public policy. This may be so for ideological reasons because failure to take account of them provides a stronger argument for downsizing public institutions. These theories have failed to influence competition policy and the design of more efficient systems for public administration (contracting out, labour contracts for public employment, adoption of the user-pays principle and use of performance budgeting and accounting) as well as in policies to remove market frictions. The result may be less efficient systems than otherwise achievable and diminished long-term economic performance.
Keyword transaction cost theory
bounded ratonality theory
public administration
public policy
efficiency
institutional economics

Document type: Department Technical Report
Collections: Discussion Papers (School of Economics)
Ecology Centre Publications
 
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Created: Thu, 17 Jun 2004, 10:00:00 EST by Belinda Weaver (EA)