Knowledge, learning and institution 
Lecturer:Professor Zhou Ye'an, Renmin University 
Discussants:Dr. Li Zhenmin, CASS;Dr. Luo Zhongwei, CASS;Prof. Mao Yushi, Unirule Institute of Economics;Prof. Zhang Shuguang, Unirule Institute of Economics;Prof. Sheng Hong, Unirule Institute of Economics 
 
 
Professor Zhou contends that there are two strands of assumption in new institutional economics, the first one is sufficient rationality, the other is bounded rationality. The difference in these two assumptions leads to difference understandings on new institutional economics. Many new institutional economists take the assumption that economic agents are of sufficient rationality. However, professor Williamson introduced bounded rationality into assumptions thus transaction costs economics is established. This development makes new institutional economics go back to the approaches of professor Coase who analyzes the economics of real world.

Professor Zhou points out that the most difficult problem for scholars to advance the studies on new institutional economics is the difficulty to discern the origin of transaction costs. For institutional economists, the economic performance of an institution relies on transaction costs. Institutions with smaller transaction costs will have a better performance. But where do transaction costs come from? There is no consensus.

From 1990s, economists began to explore the nature of transaction costs. Is it objective or subjective? It is traced back to the basic attitude toward mechanism design and institutional evolution. Knowledge and learning model which highlight the role of subjective nature of transaction costs. It is also the core issue of behavioral economics.

In this session, professor Zhou made a very good literature review on the evolution of new institutional economics, recent discussions and its possible development.