Why do states sometimes use informal institutions instead of formal organizations to govern global policy issues? Extant research on the forms of institutionalization in global governance focuses on formal modes of cooperation, such as intergovernmental organizations and treaties. Formal rules, however, do not exhaust the institutional variety of international cooperation. They are often inadequate, if not entirely misleading, descriptions of the game that actors play in world politics. Recent work in political science, economics, and international law has started to examine informal governance as a mode of international cooperation. Informal governance refers to unwritten (and often vaguely specified) rules, shared expectations, and norms that are not enshrined in formally constituted organizations and which modify or substitute legally binding rules. It includes informal practices within formal IGOs, informal institutions, and a broad array of networks constituted by state and non-state actors. This project examines the factors that lead states to choose between formal intergovernmental organizations, informal intergovernmental organizations, and transnational governance networks to structure their interactions and govern global problems. We also investigate the interactions between formal and informal institutions. I highlight the political dimensions of informal governance and argue that distributional conflict and power asymmetries are critical for the selection and design of informal institutions. States and transnational actors use informal institutions as a means to project power and bias outcomes toward their particularistic interests. Using an original new dataset on formal and informal international cooperation, I test hypotheses derived from this argument as well as alternative theoretical approaches using a multi-method research design that combines case studies and statistical analysis.