Game Theory and Institutional Economics in Action:  A Comparative Study with Focus on Ukraine

Ihor Hurnyak; Oleksandra Werbowa

doi:10.18778/1427-9657.13.09

Authors

Ihor Hurnyak Lwowski Uniwersytet Narodowy im. Iwana Franki https://orcid.org/0000-0003-0926-2456
Oleksandra Werbowa Uniwersytet Warmińsko-Mazurski w Olsztynie https://orcid.org/0000-0002-5316-9630

DOI:

https://doi.org/10.18778/1427-9657.13.09

Keywords:

institutions, institutional economics, game theory, econophysics, Ukraine, economic transformation, Williamson

Abstract

This article explores the role of institutional dynamics in transition economies, with a particular focus on Ukraine’s economic transformation. As Ukraine shifts from a centrally-planned to a market-based economy, it faces significant challenges stemming from entrenched oligarchic control, corruption, and dysfunctional institutional frameworks. The study aims to investigate how institutional interactions, transaction costs, and historical legacies shape Ukraine’s economic stability and governance structures. By integrating institutional economics, game theory, and econophysics, the article examines the underlying forces that influence Ukraine’s economic landscape. It also compares Ukraine’s experience with those of Poland, Russia, and the United Kingdom to provide insights into the potential for reform.

The research employs an interdisciplinary methodology, utilising institutional economics and transaction cost theory, game theory, and econophysics to model the interactions of economic actors within a volatile environment. The methodological toolkit includes stock portfolio optimisation to study stock market mechanisms; Axelrod tournaments to explore the interactions of political and market institutions; and the examination of basic and vibrational forces to illustrate the evolving nature of transaction costs at the enterprise level. Conversely, the paper emphasises the critical role of robust institutional mechanisms – including business operations, local self-governance, judicial systems, law enforcement, and electoral processes – alongside well-functioning market economy frameworks that place a human at the centre of the institutional pyramid, in fostering economic stability and growth.

The findings offer valuable insights into the complexities of Ukraine’s transition, providing practical guidance for policymakers and contributing to the broader academic discourse on institutional dynamics in transition economies.

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