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SOCIAL INTERACTION AND TECHNOLOGY

Humans have sought to solve the problem of provisioning through social interaction and the use of technology. Social interaction is used to refer to the relationships between two or more individuals. In this context, an “individual” has the ability to make a decision and carry that decision out. In legal terms, this individual is called an “agent.” (One of the important concepts in law and economics is the relationship between a principal and an agent. This concept will be addressed in more detail later in the text.)

An agreement between two individuals or agents is a contract. The agreement may be influenced by social institutions as well as the preferences and values of the individuals. A social institution is a habitual pattern of
behavior that is embedded in a social system. Marriage is an example of a social institution. It is a contract between two people. The form of that contract is influenced by commonly held social values and laws of a society. Almost all societies have some form of marriage. Marriage is a social creation that provides a solution to the problem of rearing children. As a social institution, it may change over time as social values, technology, work and environment change. These institutions may vary from place to place. Money, law (or the legal system), property rights and markets are examples of economic institutions. Institutions simultaneously facilitate and constrain human activities. Technology is the knowledge about the individuals’ relationships with the natural and built environments. This knowledge can be used to alter elements in the environments to satisfy human wants. Technology involves knowledge about alternative ways of solving the problem of provisioning.

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