Includes bibliographical references (p. [537]-570) and index.

Prologue: Economics and the Wealth of Nations and People 1Part I: Coordination and Conflict: Generic Social Interactions 21Chapter One: Social Interactions and Institutional Design 23Chapter Two: Spontaneous Order: The Self-organization of Economic Life 56Chapter Three: Preferences and Behavior 93Chapter Four: Coordination Failures and Institutional Responses 127Chapter Five: Dividing the Gains to Cooperation: Bargaining and Rent Seeking 167Part II : Competition and Cooperation: The Institutions of Capitalism 203Chapter Six: Utopian Capitalism: Decentralized Coordination 205Chapter Seven: Exchange: Contracts, Norms, and Power 233Chapter Eight: Employment, Unemployment, and Wages 267Chapter Nine: Credit Markets, Wealth Constraints, and Allocative Inefficiency 299Chapter Ten: The Institutions of a Capitalist Economy 331Part III: Change: The Coevolution of Institutions and Preferences 363Chapter Eleven: Institutional and Individual Evolution 365Chapter Twelve: Chance, Collective Action, and Institutional Innovation 402Chapter Thirteen: The Coevolution of Institutions and Preferences 437Part IV: Conclusion 471Chapter Fourteen: Economic Governance: Markets, States, and Communities 473Problem Sets 502Additional Readings 529Works Cited 537Index 571.

In this novel introduction to modern microeconomic theory, Samuel Bowles returns to the classical economists' interest in the wealth and poverty of nations and people, the workings of the institutions of capitalist economies, and the coevolution of individual preferences and the structures of markets, firms, and other institutions. Using recent advances in evolutionary game theory, contract theory, behavioral experiments, and the modeling of dynamic processes, he develops a theory of how economic institutions shape individual behavior, and how institutions evolve due to individual actions, technological change, and chance events. Topics addressed include institutional innovation, social preferences, nonmarket social interactions, social capital, equilibrium unemployment, credit constraints, economic power, generalized increasing returns, disequilibrium outcomes, and path dependency.Each chapter is introduced by empirical puzzles or historical episodes illuminated by the modeling that follows, and the book closes with sets of problems to be solved by readers seeking to improve their mathematical modeling skills. Complementing standard mathematical analysis are agent-based computer simulations of complex evolving systems that are available online so that readers can experiment with the models. Bowles concludes with the time-honored challenge of "getting the rules right," providing an evaluation of markets, states, and communities as contrasting and yet sometimes synergistic structures of governance. Must reading for students and scholars not only in economics but across the behavioral sciences, this engagingly written and compelling exposition of the new microeconomics moves the field beyond the conventional models of prices and markets toward a more accurate and policy-relevant portrayal of human social behavior.