Tuesday, September 10, 2019
How do people respond to economic incentives Term Paper
How do people respond to economic incentives - Term Paper Example This research will begin with the statement that an incentive is referred to as something that motivates a person to execute an action. Incentives in economics can also be said of factors that alter the purchasing behavior of consumers. Economics as a science relies significantly on assumptions to model and analyzing the actual world. These assumptions can vary from the idea that people are rational, and will act to satisfy their self-interest, to the view that resources are scarce, and thus, becomes subject to laws of supply and demand. According to Deolalikar, and Jones, the economic incentive is a reward, benefit, or the cost that encourages an economic action. People do things purposely, and naturally, and expect benefits from their choices and actions. Before one decides to create something, and sell it to other individuals, similarly, before one buys anything, they are aware of the benefit they are going to get from the product. People respond to of incentives where some are un selfish. Some people are motivated by virtue of their duty, or community in which they live in, or the choices that they make. The truth, however, is that many people and corporations are motivated majorly by financial incentive or rather economic incentives. The facts become apparent when we look at the popularity and success of low-cost retailers such as Wal-Mart. This does not imply that they are bad company, but it exemplifies the current social responsibility that people bear.