Political institutions shape policy outcomes by establishing the rules and frameworks within which decisions are made. These institutions, which include legislatures, courts, and executive branches, determine how power is exercised and who has the authority to influence policy. They influence the agenda, dictate procedural norms, and establish checks and balances. Consequently, the design and functionality of these institutions can significantly impact the effectiveness, stability, and responsiveness of the political system, thereby affecting how policies are formulated and implemented.