The new institutionalism arose in the 1980s, in reaction to narrowly individualistic approaches in economics, political science, and sociology. The new institutionalists claim that rules, norms, and customs — often arbitrary and artificial — structure human interaction and can explain major...

In contemporary non-mainstream economic debate, it is widely thought that the functioning of a market economy needs a set of rules (i.e. institutions) which bind agents in their behaviour, allowing efficient outcomes. This idea is contrary to the General Equilibrium Model (GEM) where markets are...