An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Sudipta Basu
Emory University

Gregory Waymire
Emory University

Abstract: We seek to characterize the evolutionary role of the transactional record that is the foundation of modern accounting. We argue that formal recordkeeping institutionalizes memory, and along with other economic institutions (e.g., law, weights and measures), promotes the trust needed for large-scale human cooperation. This hypothesis yields two predictions: (1) permanent records emerge as a memory aid when complex intertemporal exchange between strangers becomes more common and (2) systematic records and other exchange-supporting institutions co-evolve and feed back to increase gains from economic coordination and division of labor. Many aspects of ancient Mesopotamian records are consistent with these predictions, suggesting that our hypothesis is plausible. We describe ways to directly test our predictions with experiments, ethnographies and agent-based models, and other techniques that can be used to explore the co-evolution of accounting with the brain, language, and law.

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