Opportunistic Behavior

Opportunistic behavior is taking advantage of a situation for one's own self-interest, often to the detriment of others. It is a key component of transaction cost analysis (Williamson, 1975).

Opportunism in markets often occurs when there is an imbalance in information among exchange partners (p.26). In perfect markets opportunism can be punished or avoided, but in real markets the scarcity of players can make this more difficult (p.28).

Williamson uses the potential of opportunistic behavior to explain why some market activities are internalized into organizations to reduce transaction costs and improve efficiency. Opportunistic behavior can often be better controlled within hierarchies than in markets (p. 29).