The Institution Bootstrapping Problem and Some Counter-Intuitive Solutions

Institutions are rule systems that play a critical role in enabling communities to manage common-pool resources (e.g., grazing lands, fisheries, or even Minecraft servers) and help them avoid antisocial outcomes by regulating individual selfinterest. Prior research suggests institutions emerge when universal participation yields greater collective benefits than noncooperation [3], [6]. However, a fundamental issue arises: Individuals typically perceive participation as advantageous only after an institution is established, creating a paradox—how can institutions form if no one will join before a critical mass exists? We term this conundrum the institution bootstrapping problem and propose that misperception—specifically, agents' erroneous belief that an institution already exists—could resolve this paradox. To achieve this, we integrate welldocumented psychological phenomena—including cognitive biases and perceptual noise—into a game-theoretic framework, demonstrating how these factors collectively mitigate the bootstrapping problem [1].