Michigan State University Staff Paper

The relationships between and among institutions, participant's behavior and economic performance are important in several academic disciplines, in the practical affairs of governments, and in the decisions of firms, households and individuals. The most basic generic paradigm in social science is that social and physical environments shape or at least influence human behavior and the resulting behavior of individuals interacting with the environment influences the performance of the unit of society under consideration. This essay is concerned with the problems of developing and using paradigms, theories, or simple beliefs about the relationships among institutions, behavior and performance, recognizing that behavior is never determined by institutions alone, but is always shaped and influenced by the environments of individual actors as well as by their physical makeup.