INSTITUTIONAL CONSTRUCTS: BELIEFS, NORMS, and FORMAL INSTITUTIONS 1) A BELIEF is

INSTITUTIONAL CONSTRUCTS: BELIEFS, NORMS, and FORMAL INSTITUTIONS

1) A BELIEF is adhered to as a demonstration of PREFERENCE – even if that preference is only the discount value of habits.

2) AN INFORMAL INSTITUTION: A NORM is adhered to out of PRACTICAL utility – they are observed to obtain benefit, and avoidable at a cost.

3) A FORMAL INSTITUTION is adhered to out of practical NECESSITY – they are unavoidable if you want to pursue your objectives.

The differences are not arbitrary. All three systems are institutions. Those institutions differ because of the choice we possess in bearing the costs, and gaining the rewards of adhering to them.

Cheers