Recent insights from the ‘embodied cognition’ perspective in cognitive science, supported by neural research, provide a basis for a ‘methodological interactionism’ that transcends both the methodological individualism of economics and the methodological collectivism of (some) sociology,...

This paper uses a cognitive theory of firms and organizations, with a focus on learning and innovation.Here, cognition is a wide notion, including value judgments and corresponding feelings and emotions.This paper focuses on the relation between that cognitive theory and Penrose's theory of the...

This chapter explains and employs a constructivist, interactionist theory of knowledge that has come to be known as the perspective of 'embodied cognition'. That view has roots in earlier developmental psychology, and in sociology, and more recently has received further substance from neural...

This paper presents elements of a cognitive theory of the firm, from the perspective of embodied cognition.It entails the notion of 'cognitive distance' between people that have developed their cognition in different environments. This yields the notion of the firm as a 'focusing device', to...

This paper formalizes the difference between firms, nonprofits, and cooperatives and identifies optimal organizational choice. In a model of quality provision, we find a clear ranking of quality produced: Firms provide lowest and nonprofits highest levels of quality. Efficiency, however, depends...

We consider a situation in which a group of banks consider connecting their Automated TellerMachines (ATMs) in a network, so that the banks customers may use ATMs of any bank in the network.The problem studied is that of allocating the total transaction costs arising in the network, among the...

In this paper we empirically analyze the impact of transaction costs on the performance of affine interest rate models. We test the implied (no arbitrage) Euler restrictions, and we calculate the specification error bound of Hansen and Jagannathan to measure the extent to which a model is...