Institutions are the rules of the game in society - both formal laws and informal norms that constrain behavior.
Emergence Process
- Informal Norms: Repeated interactions create expectations
- Formalization: Norms codified into explicit rules
- Enforcement: Third-party punishment mechanisms
- Legitimacy: Rules internalized and self-enforcing
Key Dynamics
- Path dependence - early choices constrain later options
- Enforcement costs vs. benefits of cooperation
- Critical mass for norm stability
- Institutional change and resistance