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==Etymology==
late [http://nordan.daynal.org/wiki/index.php?title=English#ca._1100-1500_.09THE_MIDDLE_ENGLISH_PERIOD Middle English] < LL incentīvus provocative, L: setting the [[tune]], equiv. to incent ( us ) (ptp. of incinere to [[play]] (an instrument, tunes); in- in-2 + -cinere, comb. form of canere to sing) + -īvus -ive
*[http://en.wikipedia.org/wiki/15th_Century 1400-50]
==Definitions==
*1. something that incites or tends to incite to [[action]] or greater [[effort]], as a reward offered for increased productivity.
*2.inciting, as to [[action]]; stimulating; provocative.
==Description==
In [[economics]] and [[sociology]], an '''incentive''' is any [[factor]] ([[financial]] or non-financial) that enables or [[motivates]] a particular [[course]] of [[action]], or counts as a reason for preferring one [[choice]] to the alternatives. It is an [[expectation]] that [[encourages]] people to behave in a certain way. Since [[human being]]s are [[purpose]]ful [[creatures]], the [[study]] of incentive [[structures]] is central to the study of all [[economic]] [[activity]] (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.[2]
==Categories==
Incentives can be 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 three broad classes:
*1. Remunerative incentives (or financial incentives) are said to exist where an [[agent]] can expect some form of [[material]] reward — especially [[money]] — in exchange for [[acting]] in a particular way.
*2. [[Moral]] incentives are said to exist where a particular [[choice]] is widely regarded as the right thing to do, or as particularly admirable, or where the failure to act in a certain way is [[condemned]] as indecent. A person acting on a [[moral]] incentive can expect a sense of [[self]]-[[esteem]], and approval or even admiration from his [[community]]; a person acting against a moral incentive can expect a sense of [[guilt]], and condemnation or even ostracism from the [[community]].
*3. [[Coercive]] incentives are said to exist where a [[person]] can expect that the failure to [[act]] in a particular way will result in [[physical]] [[force]] being used against them (or their loved ones) by others in the [[community]] — for example, by inflicting [[pain]] in punishment, or by imprisonment, or by confiscating or destroying their [[possessions]].
(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]]. In this usage, the category of "coercive incentives" is excluded.[http://en.wikipedia.org/wiki/Incentive]
[[Category: Economics]]
[[Category: Psychology]]
==Etymology==
late [http://nordan.daynal.org/wiki/index.php?title=English#ca._1100-1500_.09THE_MIDDLE_ENGLISH_PERIOD Middle English] < LL incentīvus provocative, L: setting the [[tune]], equiv. to incent ( us ) (ptp. of incinere to [[play]] (an instrument, tunes); in- in-2 + -cinere, comb. form of canere to sing) + -īvus -ive
*[http://en.wikipedia.org/wiki/15th_Century 1400-50]
==Definitions==
*1. something that incites or tends to incite to [[action]] or greater [[effort]], as a reward offered for increased productivity.
*2.inciting, as to [[action]]; stimulating; provocative.
==Description==
In [[economics]] and [[sociology]], an '''incentive''' is any [[factor]] ([[financial]] or non-financial) that enables or [[motivates]] a particular [[course]] of [[action]], or counts as a reason for preferring one [[choice]] to the alternatives. It is an [[expectation]] that [[encourages]] people to behave in a certain way. Since [[human being]]s are [[purpose]]ful [[creatures]], the [[study]] of incentive [[structures]] is central to the study of all [[economic]] [[activity]] (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.[2]
==Categories==
Incentives can be 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 three broad classes:
*1. Remunerative incentives (or financial incentives) are said to exist where an [[agent]] can expect some form of [[material]] reward — especially [[money]] — in exchange for [[acting]] in a particular way.
*2. [[Moral]] incentives are said to exist where a particular [[choice]] is widely regarded as the right thing to do, or as particularly admirable, or where the failure to act in a certain way is [[condemned]] as indecent. A person acting on a [[moral]] incentive can expect a sense of [[self]]-[[esteem]], and approval or even admiration from his [[community]]; a person acting against a moral incentive can expect a sense of [[guilt]], and condemnation or even ostracism from the [[community]].
*3. [[Coercive]] incentives are said to exist where a [[person]] can expect that the failure to [[act]] in a particular way will result in [[physical]] [[force]] being used against them (or their loved ones) by others in the [[community]] — for example, by inflicting [[pain]] in punishment, or by imprisonment, or by confiscating or destroying their [[possessions]].
(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]]. In this usage, the category of "coercive incentives" is excluded.[http://en.wikipedia.org/wiki/Incentive]
[[Category: Economics]]
[[Category: Psychology]]
