The diverse literature on policy design and policy instruments is reviewed in this paper, which also addresses such issues as the definition of a policy design perspective, the categorization and variables of policy instruments, and improvement of the design process. The first part presents a general discussion of the perspective of policy formation known as "policy design." The next part examines several recently developed typologies of governing instruments (tools used to fulfill goals) with attention to four basic government resources--nodality (property of being in the middle of an information or social network), treasure, authority, and organization. Factors for choosing among policy instruments are also discussed, which include the attributes of instruments, the context in which assessment occurs, and endogenous variables. The final part suggests an improvement strategy based on a more systematic analysis of the underlying structural logic of policy examples and the development of a synthesis of policy instrument classifications and their characteristics. Conclusions are that many policy failures can be traced to flaws in the instruments of government and in policy design. The new approach should concentrate on the generic tools of government action rather than on individual programs. Six figures and two tables are included. (88 references) (16 endnotes) (LMI)