ABSTRACT
Standard choice theory tries to explain behavior by matching the "competence" of an agent with the "difficulty" in selecting most preferred alternatives. Neoclassical decision and general equilibrium models are typically without any explicit institutional structure, and have thus tended to direct attention away from questions about the evolution of particular forms of market organization and other social institutions. At some point, the evolution of more complex social interdependence will stop, unless social structures also evolve that reduce the scope of nonlocal information that individual agents must know to reliably forecast the consequences of their own behavior. One area of major normative significance is the development of human social institutions; in particular, political institutions that have the opportunity to influence the outcomes generated by exchange competition. On a wider scale, the history of civilization can be organized around a theme of groping for social rule-mechanisms.
