A Game Theory perspective on Public Institutions - the case of Romanian Education System
Keywords:education, reform, Game Theory, Behavioral Economics, policy makers
AbstractInstitutional reforms frequently fail because they are based on unrealistic hypotheses leading to limited models. A narrow mechanical vision focused only on hierarchy and roles may not be adequate when trying to understand how institutions work in the context of human society. Such a vision does not take into account human nature. We propose a model based on Game Theory and Behavioral Economics. Our model complements the centralized hierarchical vision about a public institution by adding a new dimension regarding the strategic interactions between agents/players. The case of Romanian Education System is considered as application domain. Three simple games describing common situations that appear inside this system are analyzed. Nash equilibria detected in these games indicate stable states of the system, states from which no player has any incentive to unilaterally deviate. The results help to explain why some reforms are so difficult to implement. Policy makers and institutional managers may find the proposed model useful in making public institutions more efficient.
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