Theoretical Integration of New Institutional Economics

The purpose of this study is to investigate the theoretical integration or eclecticism of New Institutional Economics (NIE) on the basis of the four-stage Tillings model. The first step demonstrates that the new institutionalists, as to confront the hegemonic scientific mainstream, stated that their goal was to moderate neoclassical assumptions, but in fact, their main goal was to expand and strengthen institutional thinking in the neoclassical context. The second step indicates that NIE, in terms of assumptions such as methodological individualism and limited rationality, considers the institutional framework as an interactive rule that individuals implement to reduce the Transaction Cost (TC). TC is the connecting point that brings institutions into neoclassical economic performance; so it can be concluded that the NIE has been successful in establishing a metalanguage. The third step maintains that the composition is synthetic and vertical. An in-depth study of the issue in the last step illustrates that the most important challenge of the NIE is the occurrence of infinite regression due to conditional optimization of the institutional framework. The occurrence of such conflicts does not imply an unintentional theoretical eclecticism, but rather the use of neoclassical theory as a means of influencing institutional thinking among economists. All of these results indicate the proper integration of NIE as a research program.