The rational choice theory of social institutions: cooperation, coordination, and communication

Abstract

In both economics and political science, the study of institutions has achieved a new and increasing prominence over the past twenty years. This emphasis contrasts with economists' previous devotion to the neoclassical paradigm and, to some extent, with behavioralist and pluralist approaches to studying politics. In part this change is due to an interest in problems concerning particular institutional settings: the efficient structuring of the business firm, the nature and practice of economic regulation, the criticism or reform of democratic political institutions, and, more recently, the transition from command economies and totalitarian polities to more capitalistic and democratic forms. But, partly as a result, there has also been an increased appreciation of the need for positive economic and political theory that not only incorporates institutions and their effects, but also gives us tools to analyze institutional formation, maintenance, and change.