Incentive

An incentive is something that motivates an individual to perform an action. The study of incentive structures is central to the study of all economic activities (both in terms of individual decision-making and in terms of co-operation and competition within a larger institutional structure). Economic analysis, then, of the differences between societies (and between different organizations within a society) largely amounts to characterizing the differences in incentive structures faced by individuals involved in these collective efforts. Ultimately, incentives aim to provide value for money and contribute to organizational success.

Categorizing incentives

Incentives can be to classified according to the different ways in which they motivate agents to take a particular course of action. One common and useful taxonomy divides incentives into four broad classes:

There is another common usage in which incentive is contrasted with coercion, as when economic moralists contrast incentive-driven work – such as entrepreneurship, employment, or volunteering motivated by remunerative, moral, or personal incentives – with coerced work – such as slavery or serfdom, where work is motivated by the threat or use of violence, pain and/or deprivation. In this usage, the category of "coercive incentives" is excluded. For the purposes of this article, however, "incentive" is used in the broader sense defined above.

Incentive (disambiguation)

An incentive is something that motivates an individual to perform an action.

Incentive may also refer to:

See also