Jack Knight, Institutions and Social Conflict (2004[1992]), Chapters 3, 5.

Chapter 3: Institutions and Strategic Choice: Information, Sanctions, and Social Expectations
Summary: examines how institutions affect the rationality of social actors. The formation of social expectations is key to understanding the effects.
Important Insight: Social institutions affect strategic decision making by establishing social expectations, and they do so through two mechanisms: the provision of information and sanctions. Through these mechanisms social actors learn the information necessary to formulate expectations about the actions of those with whom they interact. With these expectations they choose the strategies that they think will maximize their individual benefits. In this way institutions affect strategic choice and, therefore, social outcomes.
The expectations established by social institutions are effective b/c of the very fact that they are social: (1) Knowledge of them is shared by members of the community, and (2) they are presumed to be generally applicable to all engaged in similar interactions. Consequently, the fundamental goal of institutional development is to establish social rules that produce favourable expectations, rules that, through those expectations, constrain the actions of those with whom they interact.
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Chapter 5: The Spontaneous Emergence of Social Institutions: A bargaining theory of emergence and change.
Summary: Offers a theory of decentralized emergence and change that captures the asymmetries of benefits that characterize informal networks. Proposes micro-foundations for the informal network of rules, conventions, and norms that capture some of the principal ideas of macro-level accounts in the Weberian and Marxian tradition. Shows how the importance of distributional conflict and power asymmetries can be incorporated into a rational-choice theory of the spontaneous emergence of social institutions. Offers a theory of spontaneous emergence that is more general than the other approaches b/c it is based on less restrictive empirical conditions.
Method: formal models.
Important Insight: in order to explain the substantive content of social institutions and, therefore, completely explain institutional development and change, our theories must focus primarily on the strategic conflict itself and on the mechanisms by which this conflict is resolved. Not only is such an emphasis dictated by the logic of assuming self-interested strategic behaviour, but also by our empirical understanding of social institutions.
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Notes
-underlying argument: the primary force of institutional effects is distributional – the determination of the division of benefits that characterize social outcomes.
Chapter 3: Institutions and Strategic Choice: Information, Sanctions, and Social Expectations
-key point: examines how institutions affect the rationality of social actors. The formation of social expectations is key to understanding the effects.
-Social institutions affect strategic decision making by establishing social expectations, and they do so through two mechanisms: the provision of information and sanctions. Through these mechanisms social actors learn the information necessary to formulate expectations about the actions of those with whom they interact. With these expectations they choose the strategies that they think will maximize their individual benefits. In this way institutions affect strategic choice and, therefore, social outcomes.
-The expectations established by social institutions are effective b/c of the very fact that they are social: (1) Knowledge of them is shared by members of the community, and (2) they are presumed to be generally applicable to all engaged in similar interactions. Consequently, the fundamental goal of institutional development is to establish social rules that produce favourable expectations, rules that, through those expectations, constrain the actions of those with whom they interact.
-an indvl actor, motivated by a desire to maximize his or her own sets of goals, faces one of two possible decision making environments:
-the parametric world (where the environment is taken as a given)
-but these types of situations are limited to instances of perfect market competition and are not relevant for most social and political institutions.
     -strategic interdependence (the dominant environment for social interactions)
-three forms of interdependence are characteristic of strategic interdependence:
     1) The rewards of each depend on the rewards of all
     2) The rewards of each depend on the choices of all
     3) The choices of each depend on the choices of all
-in order to select a strategy that will maximize their own interests, rational actors must a) take into consideration the actions of others, and b) be aware that their choices will affect the choices of the other actors with whom they interact.
-the distributional effects of social institutions are a function of the social expectations produced by those institutions.
-two types of institutions:
     -self-enforcing: rely mainly on the strategic acuity of social actors
-externally enforced: introduce additional actors as enforcers who can alter the nature of social interactions.
-institutions as social rules: rules are guides to future courses of action, and as institutions they are socially shared, applicable to all persons in the community.
-institutional rules and ideology: ideology is the beliefs and values – the cognitive map – according to which social actors interpret and give meaning to the world… With this conception we can establish a link b/w ideology and social institutions. If ideology consists in part of one’s beliefs about how the world works, an important aspect of one’s beliefs will be the ideas about how people act and how they are supposed to act.
-strategic actors do not create institutions merely to provide information that will stabilize expectations. Rather, they seek to stabilize expectations as a means of gaining benefits from social interacts… The reduction of uncertainty is only a means of achieving distributional benefits.
Chapter 5: The Spontaneous Emergence of Social Institutions: A bargaining theory of emergence and change.
-key point: in order to explain the substantive content of social institutions and, therefore, completely explain institutional development and change, our theories must focus primarily on the strategic conflict itself and on the mechanisms by which this conflict is resolved. Not only is such an emphasis dictated by the logic of assuming self-interested strategic behaviour, but also by our empirical understanding of social institutions.
-offers a theory of decentralized emergence and change that captures the asymmetries of benefits that characterize informal networks. Proposes microfoundations for the informal network of rules, conventions, and norms that capture some of the principal ideas of macro-level accounts in the Weberian and Marxian tradition. Shows how the importance of distributional conflict and power asymmetries can be incorporated into a rational-choice theory of the spontaneous emergence of social institutions. Offers a theory of spontaneous emergence that is more general than the other approaches b/c it is based on less restrictive empirical conditions.
     -done using formal models
-social institutions are a by-product of strategic conflict over substantive social outcomes. Because social outcomes are the product of the interdependent strategies of all those with whom we interact, in substantive conflicts we week to constrain the strategies of others in such a way as to secure our own preferred alternatives. Social institutions regularize these constraints .
-institutional development is a contest among actors to establish rules that structure outcomes to those equilibria most favourable to them. This contest is determined by the parties’ relative abilities to force others to act in ways contrary to their unconstrained preferences. In the end, if strong actors can constrain others to choose a particular equilibrium strategy, the weak will comply whether or not they want to do so.
-From this it follows that social actors respect these institutional rules not because they have agreed to them and not because they evolved as Pareto improvements but simply because they cannot do better than to do so.
-once an institution is established, change comes slowly and often at considerable cost. Strategic actors will continue to respect existing social institutions unless (1) assuming that they have the power to change them, external events change and alter the long-run benefits produced by them, or (2) assuming that other arrangements will produce a more favourable distributional division, they can resolve the formidable collective-action problems prerequisite to such institutional change.
-a change in the informal rules of a society can be generated by changes in either the distributional consequences of those rules or the relative bargaining power of the actors.
-the main benefactors of the initial rules lose their distributive advantage in the change. Thus, the changes cannot be explained by referring to social efficiency, Pareto superiority, or even compensation. Rather, these changes can be explained by a shift in the relevant asymmetries of resources in a society, shifts that reflect systematic changes in the distribution of bargaining power.