[1] The NIE assume that individuals are rational and that they seek to maximize their preferences, but that they also have cognitive limitations, lack complete information and have difficulties monitoring and enforcing agreements.
[5][6] Among the many aspects in current analyses are organizational arrangements (such as the boundary of the firm), property rights,[7] transaction costs,[8] credible commitments, modes of governance, persuasive abilities, social norms, ideological values, decisive perceptions, gained control, enforcement mechanism, asset specificity, human assets, social capital, asymmetric information, strategic behavior, bounded rationality, opportunism, adverse selection, moral hazard, contractual safeguards, surrounding uncertainty, monitoring costs, incentives to collude, hierarchical structures, and bargaining strength.
Major scholars associated with the subject include Masahiko Aoki, Armen Alchian, Harold Demsetz,[9][10] Steven N. S. Cheung,[11][12] Avner Greif, Yoram Barzel, Claude Ménard (economist), and five Nobel laureates—Daron Acemoglu, Ronald Coase,[13][14] Douglass North,[15][16] Elinor Ostrom,[17] and Oliver Williamson.
[21] The NIE has influenced scholars outside of economics, including historical institutionalism, influential works on U.S. Congress (e.g. Kenneth Shepsle, Barry Weingast), international cooperation (e.g. Robert Keohane, Barbara Koremenos), and the establishment and persistence of electoral systems (e.g. Adam Przeworski).
[25][26][27] Although no single, universally accepted set of definitions has been developed, most scholars doing research under the methodological principles and criteria follow Douglass North's demarcation between institutions and organizations.
To enhance their chance of survival, actions taken by organizations attempt to acquire skill sets that offer the highest return on objective goals, such as profit maximization or voter turnout.
However, if the task consists of evaluating people's performance in a specific teaching department, for example, along with their own internal formal and informal rules, it, as a whole, enters the picture as an institution.