ABSTRACT
That institutions matter has been a path breaking insight in neoclassical economics (North, 1981). Since then, it has been shown by comparative studies within new institutional economics that they heavily influence economic performance of economic systems. That institutions have a considerable influence on preferences or changing tastes has equally been acknowledged (Bowles, 1998). This chapter asks in the opposite direction how endogenous – and substantive – preferences influence institutions and institutional change. How can it be explained that in some cases seemingly efficient institutions are not viable for long or why they are not voted for at one time but gain acceptance through time? Are there human universals in the substance of preference content or other systematic influences, and how do they come into play? These questions of institutional embeddedness have largely remained a matter unresolved.
