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Describe how people respond predictably to positive and negative incentives.
1905 Quaker Oats magazine advertisement
Focus Question: How do people respond to economic incentives?
Click here for a definition of
: financial rewards for making specific choices or taking certain actions. For example, buying certain items at the store, eating at certain restaurants, or choosing certain companies.
: financial punishment for making specific choices or taking certain actions. For example, speeding or littering.
Businesses and government agencies offer incentives.
Businesses like restaurants or stores offer discounts or coupons in order to get people to choose their business.
In the long run,it is hoped that this will bring in a customer to the business so it can make more money.
People often respond to positive incentives by choosing the companies that offer them the best reward.
People also respond to negative incentives.
The government offers negative incentives in the hope that it will keep people from breaking the law.
For example, there is a fine for speeding and for not wearing your seat belt. There is also a fine for littering. This negative incentive keeps people from committing these acts because they do not want to pay the penalty.
"Why Markets Work"
Video from learner.org detailing the key concepts of the market, including incentives.
about how motivation may be in fact driven by purpose and not monetary incentives. Discusses how positive and negative incentives represent rewards or punishment.
Kahn Academy video
about Incentive theory.
Harvard Business Review article
Article that deals with instances in which incentives backfire
The source mentioned at the bottom,
, is an excellent resource with clear examples and explanations. It has a useful
about economic incentives, and other ideas for a constructive classroom lesson as well.
is a page from econedlink.org with a discussion of incentives, both positive and negative, in the style of a lesson for the earlier grades. It could be modified slightly to work with older grades as well.
is another page from the same site which walks students through identifying which is a positive incentive vs. a negative incentive. The examples could be slightly modified depending on grade level.
Economic Incentives in Our Community
is another lesson plan to help illustrate the concept.
outline from econedlink.org that allows students to think about examples when their decisions were swayed based off of an incentive.
Gamification is the application of game playing to product marketing and sales and to education and classroom learning.
Keeping Up with Gamification,
Association of College & Research Libraries
What is Gamification?
Economic Incentives in our Community. Accessed May 5, 2008.
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