Which type of institution is characterized by shared beliefs governed by culture?

The correct answer emphasizes the role of informal institutions, which are fundamentally shaped by cultural practices, social norms, and shared beliefs among members of a community or society. Unlike formal institutions that are codified in laws or regulations, informal institutions operate on unwritten rules and customs that guide behavior and expectations.

These informal norms can significantly influence how people interact and make decisions within a society, encompassing aspects such as traditions, family structures, and community engagements. They often reflect historical contexts and societal values that are transmitted across generations.

In contrast, formal institutions, although they may also be influenced by culture, are primarily defined by explicit rules and legal frameworks, while legal institutions are focused on the judicial system and enforcement of laws. Economic institutions, on the other hand, pertain to the structures and systems that govern economic activity, which can include informal regulations but are mainly concerned with finance and trade. Thus, the defining characteristic of informal institutions as rooted in shared cultural beliefs makes this the most appropriate choice.