Organizational Economics is a new approach to the study of organizations. Economists use their own methods and assumptions to explore how self-interested individuals engage in organizational and contractual hehavior in order to reduce transaction costs. Their study is expressly concerned with issues at the interdisciplinary intersection of economics, law, organizational theories and organizational behavior. In organizational economists view, an organization is regarded as a nexus of contracts. Therefore, the contracts are the uints of analysis of the theory. Economic theories of organization include property right theory and agency theory those focused on the ex ante side of contracts (incentive alignment), and transaction cost theory which focused on the contract execution stage.