Institutionalisation and Institutional Evolution: A Model of Selecting Government Officials in Ancient China

ABSTRACT The evolution of institutions in selecting government officials in ancient China reflected efficiency considerations and increased power concentration in the hands of the ruler. Selecting government officials in ancient China became more rule‐based over time, and standardisation and centralisation were some key features of this process. In this dynamic model, a higher volume of transactions, shown as the number of candidates needed to be evaluated, leads to institutionalisation, which has a higher fixed cost but a lower marginal cost in processing each transaction. In the steady state, a ruler with a more encompassing interest chooses a higher level of institutionalisation. The impact of a change in the level of elite power on the level of institutionalisation is sensitive to the relative power of the state versus society.