Rationality Institutions And Economic Methodology

Neo-classical economics, with its emphasis on general equilibrium, has developed a tightly-knit group of theories of great rigour. However, it lacks a conceptualization of organization, institutions, structure and change and has virtually nothing to say about the role of norms and rules in economic behaviour. Such notions are of great significance in institutional economics, with its emphasis on property rights, contract and organizational forms. But institutional economics lacks the rigour and elegance of general equilibrium theory. Rationality, Institutions and Economic Methodology looks at ways to increase the scope and power of institutional economics. Different approaches to economic methodology are considered and the broader notions of rationality offered by institutional economics are discussed, as are the methodological problems of evolutionary and institutional change. Review: A new institution economics has been progressively taking shape. It takes a variety of forms and these have reached the stage where searching methodological reviews and critiques are needed. This book is the best of its kind in serving those purposes. -Oliver E. Williamson, University of California, Berkeley