Introduction

Neo-institutionalists argue that at the heart of the dilemmas of collective action lies incentive. The economic approach of institutions, which is largely based on the assumption of bounded rationality, suggests that individuals are selfish and calculating, and the temptation of free-riding is so strong that co-operation between individuals is impossible. To enforce collective action, the right institutional framework needs to be designed, so that individual incentives are aligned to be consistent with the desirable collective outcomes (World Bank 2003).

The neo-institutional school makes two key assumptions regarding human behaviour, which distinguish it from the neo-classical approach. Firstly, this approach is based on the premise of bounded rationality. It recognises the problems of asymmetrical information and imperfect market structures, which prevent individuals from making the ‘best’ decisions. They propose a ‘choice-within-constraints’ framework and assume that actors will pursue their best interests by making choices within these institutional constraints (Ingram and Clay 2000:525). This perspective, however, shares similar premises with the rational choice model which believes that individuals behave strategically up to the limits of their abilities. Secondly, neo-institutionalists highlight the role of institutions in the governing of human behaviour and suggest that institutional forces are involved in the moulding of individual preferences and purposes (Vandenberg 2002). Opportunism is thus minimised because it is supported by relations of trust, so that the monitoring and enforcement costs can be reduced. The objective is to integrate ‘individual choices with the constraints institutions impose on choice sets’ (North 1990:5).

Critics, however, have voiced their misgivings about the over-simplification of human motivation, which disregards the diverse and subjective meanings of co-operation people are involved in their everyday lives. They argue for a more complex model of agency which takes into account the role of routines, the perceived ‘right way of doing things’ and moral concerns (e.g., Kabeer 2000).

In this chapter, I will use the concept of ‘agency’ to explore the issue of incentives and motivations underlying the structure of social interaction. It allows me to examine how people make decisions that address participation and non-participation in specific contexts and various circumstances. This is particularly relevant to my research on Chinese migrants in Hong Kong.