Software development under bounded rationality and opportunism

Due to the wicked nature of software development, it is imperative to take into consideration bounded rationality and opportunism of the agents involved in, when managing software development projects. These two concepts, which are at the foundations of transaction cost economics, have not yet been studied in relation to software engineering. In this paper, we develop transaction cost economics approach to software engineering, specifically as it relates to governance. This approach enables us better understand the strengths and weaknesses of top-down and bottom-up processes, and outlines a method to be used in choosing amongst alternative governance structures given relevant project characteristics.