Apply Transaction Cost Economics (Williamson, 1975, 1985) to analyze governance structure choices — market, hybrid, or hierarchy — based on transaction characteristics.
SkillScore95Maintained
Automatic
◆Procurement pack
Last verified 8/28/2026
What it changes
Passed 21 of 22 test cases with the skill, and 18 of 22 without it.
Without skill82%
With skill95%
Checks it passed that the model alone missed
Identifies human and brand/intellectual asset specificity as high.
Rates asset specificity as low for generic vehicle repair services.
Formats the assessment column entries with high, moderate, or low combined with the asset specificity type.
and 1 more in the full report
3 fixed18 passed either way1 still failing0 broke
Pass-rate lift
+14 pp
Tokens
-2%
Agent turns
0%
Response time
-18%
Model gemini-3.6-flashMeasured 8/28/2026v121 of 22 cases passed with skill
Tokens, turns and time describe resource use, not a dollar price.
See it in action
One of 3 test cases the skill fixed. Same model, same prompt, with and without the skill.
1 of 3
Prompt
We are an automotive OEM evaluating whether to manufacture proprietary electric vehicle battery management microcontrollers in-house or source them from an offshore semiconductor foundry. Please perform a Transaction Cost Economics assessment on this make-or-buy decision. Structure your response under a main heading '## TCE Governance Analysis: EV Battery Management Microcontrollers'. Include a 'Transaction Profile' section featuring a table with columns for Dimension, Assessment, and Evidence that evaluates asset specificity (along with its specific type), uncertainty, and transaction frequency. Next, include a 'Governance Recommendation' section listing the recommended organizational structure, the rationale, and necessary safeguards. Finally, provide a 'Risk of Misalignment' section detailing the current governance arrangement and the predicted inefficiency.
What was checked, without and with the skill
Checked
Without skill
With skill
Recommends hierarchy or vertical integration to protect against opportunism and hold-up risks.
Passed
Passed
Uses structured bullet points starting with '- Recommended structure:' within the governance recommendation section.
Missed
Passed
Formats the assessment column entries with high, moderate, or low combined with the asset specificity type.
Missed
Passed
case-01 · gemini-3.6-flash · 8/28/2026 · answers are capped and redacted
What's inside
The instructions your model reads when the skill loads.
SKILL.md99 linessingle file
Transaction Cost Economics (TCE)
Overview
TCE explains firm boundaries by analyzing the costs of conducting transactions. Williamson (1975, 1985) argues that governance structures (market, hybrid, hierarchy) are chosen to minimize the sum of production costs and transaction costs, given bounded rationality and opportunism.
When to Use
Make-or-buy decisions
Evaluating outsourcing, alliances, or vertical integration
Designing contractual safeguards for inter-firm transactions
Analyzing why certain industries are more vertically integrated
Assumptions
IRON LAW: Governance choice depends on transaction characteristics
(asset specificity, uncertainty, frequency) — NOT on firm preference,
tradition, or ideology. A misaligned governance structure will
generate avoidable costs and eventual correction.
Key assumptions:
Bounded rationality — Agents intend rationality but achieve it limitedly
Opportunism — Some agents will pursue self-interest with guile
Transactions vary in their characteristics and thus require different governance
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