Institutional Economics into the Twenty-First Century*

This essay considers the nature and evolution of both the old and the new institutional economics and considers the possibility of dialogue or even convergence between these schools. It also considers shifts of thinking inside and outside mainstream economics that have altered the conception of the economic agent, even within mainstream theory. In particular, the stipulation of endogenous preferences, once a hallmark of the old institutionalism, is gaining legitimacy within mainstream economics. In this context, the new institutional economics is evolving in a direction that makes productive dialogue between the two institutionalist traditions more possible. (J.E.L.: B15, B25, B52)