The analysis of how institutions are formed, how they operate and change, and how they influence behavior in society has become a major subject of inquiry in politics, sociology, and economics. A leader in applying game theory to the understanding of institutional analysis, Elinor Ostrom provides in this book a coherent method for undertaking the analysis of diverse economic, political, and social institutions. Understanding Institutional Diversity explains the Institutional Analysis and Development (IAD) framework, which enables a scholar to choose the most relevant level of interaction for a particular question. This framework examines the arena within which interactions occur, the rules employed by participants to order relationships, the attributes of a biophysical world that structures and is structured by interactions, and the attributes of a community in which a particular arena is placed. The book explains and illustrates how to use the IAD in the context of both field and experimental studies. Concentrating primarily on the rules aspect of the IAD framework, it provides empirical evidence about the diversity of rules, the calculation process used by participants in changing rules, and the design principles that characterize robust, self-organized resource governance institutions.

To understand institutions one needs to know what they are, how and why they are crafted and sustained, and what consequences they generate in diverse settings. Understanding anything is a process of learning what it does, how and why it works, how to create or modify it, and eventually how to convey that knowledge to others. Broadly defined, institutions are the prescriptions that humans use to organize all forms of repetitive and structured interactions including those within families, neighborhoods, markets, firms, sports leagues, churches, private associations, and governments at all scales. Individuals interacting within rule-structured situations face choices regarding the actions and strategies they take, leading to consequences for themselves and for others.

The opportunities and constraints individuals face in any particular situation, the information they obtain, the benefits they obtain or are excluded from, and how they reason about the situation are all affected by the rules or absence of rules that structure the situation. Further, the rules affecting one situation are themselves crafted by individuals interacting in deeper-level situations. For example, the rules we use when driving to work every day were themselves crafted by officials acting within the collective-choice rules used to structure their deliberations and decisions. If the individuals who are crafting and modifying rules do not understand how particular combinations of rules affect actions and outcomes in a particular ecological and cultural environment, rule changes may produce unexpected and, at times, disastrous outcomes.

Thus, understanding institutions is a serious endeavor. It is an endeavor that colleagues and I at the Workshop in Political Theory and Policy Analysis have been struggling with for at least three decades. After designing multiple research projects; writing numerous articles; developing ideas in the classroom; learning from eminent scholars in the field, from students, and from colleagues; and making diverse attacks on this problem, it is time to try to put thoughts on this subject together within the covers of a book, even though I am still not fully satisfied with my own understanding. Consider this a progress report on a long-term project that will be continued, I hope, by many others into the future.