In his model, Williamson[l,31,32] uses human factors such
as bounded rationality (the limitations of humans to
understand more and more complex phenomena) and
opportunism (the propensity for humans to cheat when
such action is expected to improve their position in a
transaction). Opportunism is considered to be an inherent
human tendency which, unless bridled by competitive
market structures or highly measurable performance in
predictable environments, will cripple market-based
exchange. Bounded rationality arises due to the difficulty
facing human agents of replicating a perfectly functioning
market. Williamson, the founding father of TCE, states that
the goal of economic organization is to "organize
transactions so as to economize on bounded rationality
while simultaneously safe-guarding them against the hazards
of opportunism" [1, p. 32]. The principal safeguard identified
by TCE is vertical integration of the activity in question.