When we make assumptions about the behavior of individuals and institutions, we can make predictions about their behavior in a variety of situations. These situations may even include counterfactuals – what-if scenarios that did not occur in practice – allowing us to understand why particular actions were not taken. It is certainly appealing to be able to do this, but our assumptions must be tenable to make our claims reasonable. We will come to understand that all good theories capture the processes by which the phenomena we observe are generated. Good theories are not simply explanations of one event at one time.

The type of theorizing we discuss in this book is known as rational choice theory. Because this type of thinking about social phenomena may be new to some readers, it is worthwhile to very briefly review some basic concepts of rational choice before moving on to the types of models used to describe governance arrangements.

Individuals are the basic units of all the theories described in this book. These basic units might also be organizations, which, for reasons that we shall describe in connection with theories presented in later chapters, are considered to act in the same way as would individuals. Individuals have preferences. This means that an individual values, or prefers, one legislative proposal, political candidate, or project over another. Each proposal, candidate, or project is called an alternative.