Institutional legitimacy: an exegesis of normative incentives

This paper reviews the current thinking on institutions and finds that the notion of legitimacy is incompletely developed in the pervasive collective action model of new institutional economics. It argues that institutional legitimacy should be conceived as a set of normative incentives compelling people to uphold this institution and providing incentives for trust and successful institutional change. The result is a legitimacy model that allows us to better understand policy success and failures in water reform, by exploring both rules of the game and principles derived from narrative and hermeneutic analyses.