Types of incentives pdf

Statements consisting only of original research should be removed. Ultimately, incentives aim to provide value for money and contribute to organizational success. In this usage, the category types of incentives pdf “coercive incentives” is excluded.

For the purposes of this article, however, “incentive” is used in the broader sense defined above. The categories mentioned above do not exhaust every possible form of incentive that an individual person may have. One and the same situation may, in its different aspects, carry incentives that come under multiple categories. The classic example for a situation for asymmetric information can be that of a manager and worker, where manager may want a certain level of output from the worker. The manager does not know the capabilities of the worker, and to achieve the best outcome, an optimal scheme of incentive may be chosen to motivate the worker to give their best performance. An optimal incentive is one that accomplishes the stated goal.