Comparing Theories of Institutional Change

This paper compares some recent theoretical approaches to conceptualizing institutional change, in an effort to clarify areas of consensus and disagreement regarding the causes, process, and outcomes of institutional change. We do not attempt to build a “new” theory, and our survey is not intended to be comprehensive. Among the theories we discuss, some emphasize spontaneous evolutionary processes, while others emphasize deliberate design, or combinations of evolution and design. We differentiate a variety of approaches to conceptualizing the interaction between formal and informal rules. We discuss recent theories based on the “equilibrium view” of institutions, and theories emphasizing the role of cognition and bounded rationality. We also consider theoretical explanations for institutional inertia and path-dependence. 1 Corresponding author. Economics Department, Amherst College, Amherst MA 01002. [email protected] 2 Faculty of Economics, University of Vigo, Lagoas Marcosende, 36310 VIGO, Spain. [email protected]