A critical reflection

What we take from Vatn’s work for RQ3 is that the concepts and criteria distributing entitlements and obligations are usually functional to “something”. This “something” is a context-dependent definition of which particular interests counts as the common good. Out of that common good, an acceptable individual behaviour is spelled out which is more than an endowment of resources and goes as far as to define the type of rationality an individual shall (heuristically) apply to the given situation. As we deal with natural resources for which knowledge is usually imperfect, the heuristic value of the practices emerging from given institutions is enhanced. The functional ties

between an institution and its performance on the ecosystem are therefore likely to be blurred, to become invisible over time, or to be understood only ex-post.

From the point of view of RQ3, this suggests that the concepts and criteria

distributing entitlements and obligations among the actors, however functional, will have no more value than a heuristic strengthening a certain, specific management practice. The goals thereby entailed are not likely to reveal the full chain of reasoning that makes up their original rationale. Furthermore, as individuals are embedded in a thick web of institutions, partly overlapping and partly contradicting one another, they are constantly exposed to different rationales and different heuristics for similar situations. This introduces a dynamic element, triggering changes in the heuristics connected to specific situations.

institutions, context and exposure, carrying heuristic rather than optimality-oriented value.

At this point, it is important to stress that we are not interested in testing any of these assumptions. At least not per se. Our core interest instead is to build up a model of institutional change which is aware of and consistent with the findings portrayed above, as they prove meaningful to RQ0 to RQ4. In particular, very different things can be read from the distribution of entitlements and obligations (our core research object) according to the assumptions one holds on individual motivation. It is even more important to stress this aspect and make it explicit in the analytical engine of the present work because those readers trained as neoclassical economists may tend to apply opportunism and utility maximisation to the analysis of the materials presented hereby. By doing so, they are likely to be side-tracked or at least to misinterpret the line of reasoning that we intend to buttress with the analysis of the empirics. A warning is therefore in order.

3.6.2. The role of knowledge and information

Another theme recurring across the contributions mentioned above is that of

knowledge and information. What individuals know about the specific circumstances and the relationships between the various elements therein represent an important parameter explaining given arrangements and, possibly, the way they change.

Denzau and North (1994) introduce shared mental models as a prerequisite for collective action, while Ostrom (1990) points at the way information is produced and shared among the users of a common pool resource as a crucial element

characterising the institutional arrangements in which the same users are embedded.

Bromley (2006) stresses the role of beliefs and plausibility justifying specific

arrangements and triggering institutional change, while Vatn (2005a) explores with great detail the role of limited cognitive capabilities in characterising both decisions and the environment in which these decisions are put in effect.

In our opinion, what follows from the above is this: while addressing our research question and exploring the means and processes through which actors communicate

and identify a rationale for the distribution of entitlements to and obligations towards a given ecosystem (RQ4), we will need to put great emphasis on the way information enters the decision. In particular, Bromley warns us not to simply account for the accumulation of individual pieces of information but to follow how claims are

accepted or rejected throughout the whole conversation taking place among actors.

In this sense, it will be equally important to show to which extent “mental models” are indeed shared in the sense of Denzau and North (1994) and to which extent, instead, they diverge, giving rise to the rebuttal of specific arguments and reasons for or against specific arrangements.

3.6.3. The role of communication

The point on information requires us to produce an analytical framework which

devotes a good deal of attention towards the communication aspects of the empirical case it is expected to enlighten. This focus is already in-built in the formulation of RQ4, focusing on the “means and processes” through which present arrangements are reviewed, problems identified and solutions selected. This aspect has

methodological consequences: Bromley’s focus on reasonable arguments suggests an ethnographic approach, focusing on the analysis of written materials and

interviews. While these methods are very common in the field of Institutional

Economics, here we have an ontological justification for the ethnographic approach we intend to take: if 1) “means and processes” for the redistribution of entitlements and obligations are what we are after and 2) that redistributions is understood as a clash of arguments for and against specific, discrete arrangements, then we have to set up our study so as to characterise those arguments and capture their dynamics for the identification of the arrangement at stake.

Here is another warning for the reader of neoclassical economic training. With the help of Samuels, we have made clear in the above that the configuration of an economy comes about as a product of a blend of deliberative and non-deliberative processes. At this point, it would be inconsistent from our side to structure the analysis in traditional game-theoretical terms so as to plunge into a mathematical modelling of a theoretically efficient outcome by neglecting the deliberative aspects of

the decisions under scrutiny. Instead, maintaining Samuels wording, we need to enter the arena where the use of government is determined and, now going beyond Samuels, unravel the dynamics therein. We therefore need to address the

communication between actors: this seems to us the only consistent way of endogenising the decision process into the model. Everything else would instead treat the decision as a black box and merely calculate its consequences – with a doubtful consistency as both Samuels and Bromley have shown.

3.6.4. Static vs. dynamic analysis

The circularity problems highlighted by Samuels in exploring the legal-economic nexus basically consist in attempting to produce statements about something, when the very same thing is already taken for granted somewhere else in the conceptual model. This implies for us a great deal of attention in defining what changes in the model and what instead stands still. In other words, it is important to clearly tell apart variables and parameters within the whole set of the elements in the framework.

From the point of view of Economics, it is most important to keep in mind that, given the above, preferences/motivation and information cease to be parameters and become full-blown variables.

It is important to stress this as Economics distinguish static from dynamic models mainly in the light of what happens to production factors – technology in particular.

On the side of preferences, analyses are commonly kept static, or else concepts like efficiency would stop applying. This is not the case here. Given the above we intend to describe a change in arrangements as a function of a change in motivation

(including both preferences and information or, better, desires and beliefs after Bromley) which in turn is a function of the characteristics of the decision process at play. We will return to this more closely while spelling out the framework.

3.6.5. Micro vs. macro

It is worthwhile to spend a few words on the issues arising from the degree of aggregation aimed at with this work. Mancur Olson (1965) has shown that, in a neoclassical environment, individuals maximising their individual utility do not

maximise their utility as a group. Firms are groups made up of individuals. If Olson is right, either we have individuals maximising their utility or we have firms maximising their utility (that is: profit). One can’t have both in the same model, which is consistent with what Coase (1937) and Williamson (1979) have to say on business organisation.

Matters of space have forced us to leave the full range of implications of this finding on the side. Nonetheless we need here to highlight a specific tension that our framework is exposed to: the one concerning emergence. In other words, it is important to keep an eye on the different levels of aggregation within the model.

The problem is not new: we deal here with the same tension that spans between Psychology and Sociology, between Biochemistry and Biology, between

Microeconomics and Macroeconomics, between those who see the trees and those who see the forest. The problem can be described as following: analytical efforts need to identify a unit of analysis; the interaction of those units can produce, at aggregated level, properties which are counterintuitive and which cannot tout-court be explained as a product of the individual properties of the units of analyses. That is why Sociology is not yet a special case for Psychology, fully explaining sociological phenomena only based on psychological drivers. Same can be said for the link between Microeconomics and Macroeconomics and for all the dichotomies mentioned above.

Both Vatn (2005a) and Bromley (2006) deal at length with this point. We approach here one of the major issues in Economics: the fact that a fully agent-based

modelling basically neglects the existence of society. This trait of Neoclassical Economics goes under the header of Methodological Individualism. Its opposite is termed Methodological Holism (Vatn 2005a, 48-54). On a different take, Neoclassical Economics relies on Spontaneous Order, while institutionalist perspectives postulate a Constructed Order (Bromley 1998, 235-237; 2006, pg. 43-44). Both approaches deal with the question of social order and specifically with the relationship between what we can claim on individuals’ actions and what we can claim on the properties of what they represent as a group (the aggregated product of their action).

Given the above here is our specific problem: can we explain the latter based solely on the former? If we move forward from the axiom that we can’t, is it necessary to study either one? Given that the correct answer to this question is worth a Nobel price and that we don’t have it, nor do Vatn and Bromley, we circumvent the problem by adopting a research-management perspective: we will complement our formal, agent-based analysis with a rich case description that addresses the holistic perspective and keeps track of what happens at aggregated level. This solution in certainly not elegant and involves a good deal of redundancies, it however allows us to keep a whole series of phenomena under control while exploring and interpreting a complex situation.

3.6.6. Towards a synthesis

Summarising, we are about to lay down an analytical framework which:

• addresses how individuals process values and preferences so as to identify a preferred course of action (3.1.9.1.);

• makes knowledge, beliefs, truth claims and reasons for choice explicit and addresses their mutual interaction (3.1.9.2.);

• explores the actors’ possibilities to communicate with one another, mutually raising and reviewing arguments for or against certain arrangements

(3.1.9.3.);

• considers the effects the exposure to these arguments have on the way individuals process preferences and information so as to identify a course of action and, with it, a preferred arrangement (3.1.9.4.);

• does NOT distinguish and explore both the individual and the group perspective as the latter is the object of a rich case description (3.1.9.5.).

We will formulate all this in the following Chapter 4.