ABSTRACT
In his recent autobiographical essay "Better than plowing" James Buchanan remarks the ideas that capture attention are those that, directly or indirectly, explain how freely choosing individuals can secure jointly desired goals. Taking this as the starting point, the author discusses how the social institutions that are presupposed in his simple institutional model of exchange conceivably can emerge among rational actors. A numerical example is provided to illustrate comparative advantages and the possible gains from exchange in the conventional manner. The author looks at the example from the point of view of noncooperative game theory. The application of rational choice models to social interaction have provided some of the most illuminating insights of recent social theory, but these insights are basically confined to within rule choices.
