ABSTRACT
In the proposed model, institutional leaders govern emerging institutions and are engaged in relative power games with other institutions on a network. The incorporation of capitalism into economic life is rendered along trust relations between agents and power relations between institutional leaders. The evolution of societal trust and relative leader power is modelled in a two- topology modularization (micro and meso) of iterated bottom-up games. Furthermore, institutions may protect themselves from defective intruders via the establishment of enforced rules. These structures govern cooperation between and within institutionalized groups. Once trust relations are established between committing institutional members and the leader, the leader protects the members from potential invasion, for a sustained cooperative environment, i.e. a formal welfare institution. During this very process, a specific leader gains power by accumulating institutional member fees. The trustworthiness of institutional members equips the leader with capital to maintain the institution on the bottom- level topology and with a surplus of relative institutional power on the top- level topology. The relative power represents a structuration process of institutional linkages, resulting in institutional hierarchies. Leadership power allows competing with other institutional leaders within an abstract game, hence there is no assumption made on the specific purposes of these conflicts. Focus is set on the strategy evolution (through cooperation or defection) on the network, influencing the distribution of institutional power and societal trust. Leaders are involved in two major tasks, on the one hand protecting agents against possible defecting invaders, and interacting with other leaders on the other hand.
