lecture 11.1 Incentives in economics and management

Question 1

incentive

Answer 1

something that encourages a person to do something

Something, esepcially money, that encourages a person or organization to do something

Question 2

incentives in economics

Answer 2

Fame power reputation sex and love are all important incentives. Economists even think that benevolence responds to incentives

ALso critiues of incentives recognize their centrality in economics

Question 3

Planned incentives

Answer 3

1) Private benefit aimed at inducing a response

2) Principal-agent relationship

3) Set intentionally by the principals

Question 4

extrinsic motivation

Answer 4

the reason for acting lies outside the action itself, it is imposed (command) or proposed (incentive)

Question 5

intrinsic motivation

Answer 5

the reason for acting lies in the action itself. Challenge or fun within the action, ryan and deci included also every internalized action

Question 6

motivational crowding out

Answer 6

motivation crowding theory is the theory from psychology and microeconomics suggesting that providing extrinsic incentives for certain kind of behavior - such as promising monetary rewards for accomplishing some tasks, can sometimes undermine intrinsic motivation for performing that behavior

Good news for economists: incentives work

are we sure

The result of lowered motivation in contrast with the predictions of neoclassical econmoics, can be an overall decrease in the total performance

Question 7

Motivational crowding out book

Answer 7

a higher monetary compensation crowds out this intrinsic motivation in important circumstances. To offer higher pay then makes people less committed to their work and may reduce their performance

Question 8

Mco’s cause number 1: Impaired self determination

Answer 8

The persons concerned no longer feel themselves to be responsible but rather the person or institudtion undertaking the interference from outside. As a result, the intrinsic motivation is partly or wholly given up

Question 9

Mco’s cause no 2: impaired expression

Answer 9

a person acting on the basis of his or her intrinsic motivation is deprived of the chance to exhibit this intrinsic motivation to other persons

Imagine you saw spiderman acepting money from someone pointing a the old person hes helping to corss the road. NOW IMAGINE YOURE SPIDERMAN

Question 10

Why should we problematize planned incentives

Answer 10

Moral reasons: intrinsic motivations express fundamental dimensions of human life. Their reduction is not desirable (recall alienation today)

Economic reason: If extrinsic motivation undermines intrinsic motivations and this brings people to reduce their performance, then we have a problem of efficiency