This book explores institutional change and economic behaviour through examining the transition process in the eight former socialist countries that became members of the EU in 2004, looking at the phenomenal growth that has been taking place in China in the last three decades, offering a historical perspective on the causes of economic underdevelopment in the Middle East, and discussing just how much of the neo-classical paradigm is refuted by the evidence produced by experimental economics in recent years. In addition, a conceptual framework is proposed for analyzing mechanisms of institutional change,and an evolutionary model and agent-based model are developed.

Introduction; J.Kornai, L.Mátyás & G.Roland
The Great Transformation of Central-Eastern Europe: Success and Disappointment; J.Kornai
Transformation in China; Y.Qian & J.Wu
Institutional Causes of Economic Underdevelopment in the Middle East: An Historical Perspective; T.Kuran
Understanding the Great Changes in the World: Gaining Ground and Losing Ground since World War II; E.S.Phelps
The Schumpeterian Approach to Education and Growth; P.Aghion
Analyzing Institutional Change; M.Aoki
Fast-Moving and Slow-Moving Institutions; G.Roland
The Endowment Effect and the Origin of Private Property; H.Gintis
The Complex Evolution of a Simple Traffic Convention: The Functions and Implications of Habit; G.M.Hodgson & T.Knudsen
Implications of Behavioural Game Theory for Neoclassical Economic Theory; H.Gintis
A Little Behavioralism Can Go a Long Way; K.Binmore & J.Swierzbinski

JÁNOS KORNAI is at Harvard University, USA, and the Central European University and Collegium, Budapest, Hungary.

LÁSZLÓ MÁTYÁS is at Central European University, Hungary.

GÉRARD ROLAND is at the University of California, Berkeley, USA.