Rational Choice Institutionalism Institution And e

2017 Words9 Pages
End-term essay December, 2011 Written by Memeti Albert Rational choice institutionalism: Institution and economic development Rational choice institutionalism, as a part of the three approaches of the “new institutionalism”, in political science drew fruitful analytical tools from the new economics of organization. Scholars supporting this approach, tried to research the role that institutions play in the determination of social and political outcomes as well as the behavior of the individuals in broader aspect of institutions. They have a significant impact in theory of institutional economy, especially the implications of the institutional reform in the European Union, where they emphasize the importance of property rights, rent – seeking, and transactions costs to the operation and development of institutions. This paper is focuses on answering three questions: First, how rational scholars see the institutions, second, explaining the behavior of individuals and its critics; and third, presenting the economic development of transitional countries from institutional perspective. Starting with the origin of the institutions, rational choice institutionalists use the deduction method to arrive at functions that an institution performs. They explain the existence of the institution by referencing to the value that those function have for the actors affected by the institution. This formulation assumes that the actors create the institutions in order to realize this value in terms of gains of cooperation. Rational choice writers argue that institutions are constructed by individual actors for rational purposes and that individual actor engages in changing and shaping institutional environments to suit their goals. Within the rational choice tradition they set two standard ways to think about institutions. The economic historian Douglass North,
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