Types of Incentives
This type of incentive is based on receiving a tangible thing of value
What is money?
Rational choice theory assumes that every one has this as it relates to information
What is perfect information
Combines elements of economics and psychology to understand how and why people behave the way they do in the real world.
What is Behavioral Economics or B Choice Theory
The amount of satisfaction you get from something is called this by economists
What is utility?
This philosopher argued that moral incentives are only effective when they are aligned with a person's self-interest, and that people are more likely to act morally when they believe that doing so will benefit them in some way.
Who is Thomas Hobbes?
This type of incentive is based on the desire to do what is right or what is considered morally good.
What are moral or purpose Incentives?
This type of moral incentive is based on the belief that good behavior is its own reward.
What are intrinsic incentives?
An attractive person telling you what to buy
What is an example of social factors in behavioral economics
the amount for each measurement of utility
What is a util?
This incentive is good for getting people to do common tasks that do not require much skill or effort
what is money
This type of incentive is based on the threat of a punishment.
What are negative incentives?
This type of moral incentive is based on the belief that good behavior will be rewarded in the afterlife.
What are religious incentives?
Placing candy near the cash register
What is an example of using the physical environment in behavioral economics
If you rank your preferences from 1st to 5th
What is ordinal utility
What is the incentive behind not cheating on a test or assignment?
Maintain academic integrity and to demonstrate the value of hard work
This is used as an incentive when their is a sale or something is put on clearance
What is price?
This type of moral incentive is based on the belief that good behavior will lead to social recognition or approval.
What are social incentives?
How options are presented can significantly influence decisions
What are framing effects
This type of utility does not have the same measurement of util between each choice
What is ordinal utility?
What is the incentive behind not littering?
It is to show respect for the environment and to promote cleanliness in public spaces
This is a negative incentive the government may use to stop people from smoking.
What are taxes?
This moral incentive is often used to encourage people to donate money to charity or to engage in other forms of altruistic behavior.
What are philanthropic incentives?
People tend to dislike losses more than they like equivalent gains, which can affect their choices
What is loss-aversion
This type of utility assumes that the marginal utility is constant
What is cardinal utility
When the government offered a bounty on rat tails but it caused more rats to be in the city
An example of a perverse incentive