Simon Smelt: "Institutions consist of “the rules of the game” and their enforcement. They shape the types of “game” that are “played” in different societies. They do this by regulating human interaction, especially those interactions which come under the headings of “conflict”, “cooperation” and “coordination”. They encourage some activities in a society and discourage others. Four factors have been stressed in this paper as relevant to institutional design:
· information, both of different parties “out there” and of policy advisors
· motivation, including incentives but taking a wider view when appropriate
· credible commitment, both by the parties and by the state
· individual skills and organisational capabilities.
These factors are relevant to design because institutions differ in their ability to deal with, or to make use of, these factors satisfactorily."
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