Taking uncertainty seriously: complementarity as a moving target

Abstract

"In the following I will discuss a few conceptual issues related to the notion of complementarity between economic institutions. My brief notes are not meant to debunk the concept. Quite to the contrary, they are a plea for more sophistication in its use. My central claim is that current usage of the concept makes too demanding assumptions on the rationality of the actors designing and enacting economic institutions. Moreover, it suggests too static a view of institutions. In both respects, it seems necessary to rethink and make explicit the microfoundations of the concept of complementarity, grounding it in both a realistic theory of rational action on the one hand and a dynamic theory of social institutions on the other." (excerpt)