What is the Economics of convention?

Economics of convention is a research program that emerged in France in the mid-1980s, led by economists (many of whom worked at INSEE) and sociologists (questioning the capacity of the actors to judge what is worth or is not worth). Conventions correspond to collective representations, shared references that solve problems of coordination in an uncertain environment. These representations are conventional in the sense that they are one of several possible solutions and can always be called into question. Conventional analysis is therefore necessarily dynamic.

The aim is “not so much to offer a better theory than to reopen the language of economic theory” which gives too much weight to rationality and not enough to institutions, as Olivier Favereau, one of the main founders and leaders of the Economics of Convention. This conception of conventions is present in the work of Keynes who uses it to designate what guides the expectations and interpretations of operators in the financial markets. But there are many other areas where there is uncertainty and a need for conventions to deal with it: production activity (quality conventions of goods and business models), recruitment, the system Health, etc.

Some references