Compared to formal institutions, informal institutions operate at a more tacit level, where both elements work in conjunction; while formal institutions regulate economic activities, informal institutions shape the perceptions and judgments of the self, others, and their environment.
<h3>What does formal institution mean?</h3>
Formal institutions are those that are created with the intention of governing human behavior.
<h3>What does informal institution mean?</h3>
informal institutions are socially shared rules, usually unwritten, that are created, communicated, and enforced outside of officially sanctioned channels.
Informal institutions also shape formal institutional outcomes in a less visible way: by creating or strengthening incentives to comply with formal rules. In other words, they may do the enabling and constraining that is widely attributed to formal institutions.
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