Institutions

Institutions are formal rules and informal norms that structure social, political, and economic interaction. They shape expectations, constrain behavior, and make cooperation possible across time.

Formal institution: An institution built from explicit rules, procedures, and recognized authorities. Formal rules give institutional expectations an explicit, codified form.
Rules of the game: A metaphor for the constraints and expectations that structure interaction within a society. This phrase captures institutions as constraints that shape strategic choices.
Douglass North: An American economic historian who analyzed institutions as constraints shaping economic performance. North connected institutional rules to long-run economic change and development.
Institutionalism: A family of approaches that explains social and political outcomes through institutions. Institutionalism is the broader analytical tradition that studies institutions' effects.
New institutional economics: An economic approach that studies how institutions affect incentives, exchange, and economic performance. This field makes institutional rules central to explanations of economic outcomes.
Informal institution: A socially shared norm or convention that guides behavior without formal codification. Unwritten norms often govern conduct where formal rules are absent or incomplete.
Organization: A coordinated group of people with defined roles, goals, and decision procedures. Organizations act within institutional rules but are not themselves identical to those rules.
Elinor Ostrom: An American political economist who studied how communities govern shared resources. Ostrom documented institutions devised by communities beyond markets or centralized states.
Institutional change: The transformation of rules, norms, or enforcement arrangements that structure social interaction. Institutions are not fixed; this concept examines how their arrangements shift.
Comparative institutional analysis: The study of how differing institutional arrangements produce different social or economic outcomes. Comparing arrangements helps explain why similar societies can reach different outcomes.

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