Rational choice theory refers to a set of guidelines that help understand economic and social behaviour. The theory originated in the eighteenth century and can be traced back to the political economist and philosopher Adam Smith. The theory postulates that an individual will perform a cost–benefit analysis to determine whether an option is right for them. It also suggests that an individual's self-driven rational actions will help better the overall economy. Rational choice theory looks at three concepts: rational actors, self interest and the invisible hand.
Political economy is a branch of political science and economics studying economic systems and their governance by political systems. Widely studied phenomena within the discipline are systems such as labour markets and financial markets, as well as phenomena such as growth, distribution, inequality, and trade, and how these are shaped by institutions, laws, and government policy. Originating in the 16th century, it is the precursor to the modern discipline of economics. Political economy in its modern form is considered an interdisciplinary field, drawing on theory from both political science and modern economics.
Public choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science." Its content includes the study of political behavior. In political science, it is the subset of positive political theory that studies self-interested agents and their interactions, which can be represented in a number of ways—using standard constrained utility maximization, game theory, or decision theory. It is the origin and intellectual foundation of contemporary work in political economy.
Collective action refers to action taken together by a group of people whose goal is to enhance their condition and achieve a common objective. It is a term that has formulations and theories in many areas of the social sciences including psychology, sociology, anthropology, political science and economics.
Oliver Eaton Williamson was an American economist, a professor at the University of California, Berkeley, and recipient of the 2009 Nobel Memorial Prize in Economic Sciences, which he shared with Elinor Ostrom.
An institution is a humanly devised structure of rules and norms that shape and constrain social behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and norms are all examples of institutions. Institutions vary in their level of formality and informality.
Neo institutionalism is an approach to the study of institutions that focuses on the constraining and enabling effects of formal and informal rules on the behavior of individuals and groups. New institutionalism traditionally encompasses three major strands: sociological institutionalism, rational choice institutionalism, and historical institutionalism. New institutionalism originated in work by sociologist John Meyer published in 1977.
Governance is the process of making and enforcing decisions within an organization or society. It encompasses decision-making, rule-setting, and enforcement mechanisms to guide the functioning of an organization or society. Effective governance is essential for maintaining order, achieving objectives, and addressing the needs of the community or members within the organization. Furthermore, effective governance promotes transparency, fosters trust among stakeholders, and adapts to changing circumstances, ensuring the organization or society remains responsive and resilient in achieving its goals. It is the process of interactions through the laws, social norms, power or language as structured in communication of an organized society over a social system. It is done by the government of a state, by a market, or by a network. It is the process of choosing the right course among the actors involved in a collective problem that leads to the creation, reinforcement, or reproduction of acceptable conduct and social order". In lay terms, it could be described as the processes that exist in and between formal institutions.
In economics, a common-pool resource (CPR) is a type of good consisting of a natural or human-made resource system, whose size or characteristics makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use. Unlike pure public goods, common pool resources face problems of congestion or overuse, because they are subtractable. A common-pool resource typically consists of a core resource, which defines the stock variable, while providing a limited quantity of extractable fringe units, which defines the flow variable. While the core resource is to be protected or nurtured in order to allow for its continuous exploitation, the fringe units can be harvested or consumed.
The International Forestry Resources and Institutions (IFRI) Network is a collective of research partners at 12 universities or non-governmental organizations in 11 countries around the world that focus on how institutions and governance arrangements shape forest use and management outcomes. Scholars and policy makers affiliated with IFRI are interested in understanding the role of formal and informal institutions in enhancing livelihoods and adaptive capacity of peoples, conserving biodiversity, and promoting greater sustainability in carbon sequestration. IFRI's goal is to carry out rigorous research that can help policy makers and forest users design and implement improved evidence-based forest policies. IFRI comprises partner collaborating research institutes in North America, Latin America, Asia and Africa. IFRI utilizes the Institutional Analysis and Development (IAD) framework, created at the Workshop in Political Theory and Policy Analysis at Indiana University by Elinor Ostrom and her colleagues.
New Institutional Economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions that underlie economic activity and with analysis beyond earlier institutional economics and neoclassical economics. Unlike neoclassical economics, it also considers the role of culture and classical political economy in economic development.
Historical institutionalism (HI) is a new institutionalist social science approach that emphasizes how timing, sequences and path dependence affect institutions, and shape social, political, economic behavior and change. Unlike functionalist theories and some rational choice approaches, historical institutionalism tends to emphasize that many outcomes are possible, small events and flukes can have large consequences, actions are hard to reverse once they take place, and that outcomes may be inefficient. A critical juncture may set in motion events that are hard to reverse, because of issues related to path dependency. Historical institutionalists tend to focus on history to understand why specific events happen.
Elinor Claire "Lin" Ostrom was an American political scientist and political economist whose work was associated with New Institutional Economics and the resurgence of political economy. In 2009, she was awarded the Nobel Memorial Prize in Economic Sciences for her "analysis of economic governance, especially the commons", which she shared with Oliver E. Williamson. She was the first woman to win the Nobel Prize in Economics.
A collective action problem or social dilemma is a situation in which all individuals would be better off cooperating but fail to do so because of conflicting interests between individuals that discourage joint action. The collective action problem has been addressed in political philosophy for centuries, but was most clearly established in 1965 in Mancur Olson's The Logic of Collective Action.
Social rule system theory is an attempt to formally approach different kinds of social rule systems in a unified manner. Social rules systems include institutions such as norms, laws, regulations, taboos, customs, and a variety of related concepts and are important in the social sciences and humanities. Social rule system theory is fundamentally an institutionalist approach to the social sciences, both in its placing primacy on institutions and in its use of sets of rules to define concepts in social theory.
Institutional analysis is the part of the social sciences that studies how institutions—i.e., structures and mechanisms of social order and cooperation governing the behavior of two or more individuals—behave and function according to both empirical rules and also theoretical rules. This field deals with how individuals and groups construct institutions, how institutions function in practice, and the effects of institutions on each other, on individuals, societies and the community at large.
Vincent Alfred Ostrom was an American political economist and the Founding Director of the Ostrom Workshop based at Indiana University and the Arthur F. Bentley Professor Emeritus of Political Science. He and his wife, the political economist Elinor Ostrom, made numerous contributions to the field of political science, political economy, and public choice.
Rational choice institutionalism (RCI) is a theoretical approach to the study of institutions arguing that actors use institutions to maximize their utility, and that institutions affect rational individual behavior. Rational choice institutionalism arose initially from the study of congressional behaviour in the U.S. in the late 1970s. Influential early RCI scholarship was done by political economists at California Institute of Technology, University of Rochester, and Washington University. It employs analytical tools borrowed from neo-classical economics to explain how institutions are created, the behaviour of political actors within it, and the outcome of strategic interaction.
Policy network analysis is a field of research in political science focusing on the links and interdependence between government's sections and other societal actors, aiming to understand the policy-making process and public policy outcomes.
Marcus Alexander "Marco" Janssen is a Dutch American econometrician and Professor at the Arizona State University and Director of its Center for Behavior, Institutions, and the Environment. He is known for his work on the modelling of socio-ecological systems.
