Incentives
Laws and principles filed under Economics & Organizations / Incentives.
Incentives
Every guide includes meaning, mechanism, applications, limitations, related concepts, and traceable references.
Contracting problem under asymmetric information
Principal-Agent Problem
When one party delegates work to another but cannot fully observe action, information, or objectives, a contract must trade stronger incentives against risk, measurement error, and distorted behavior.
Institutional bargaining benchmark
Coase Theorem
With well-defined rights, complete information, and zero transaction costs, bargaining can reach an efficient allocation regardless of the initial assignment of rights, though distribution still differs.
Short-run production regularity
Law of Diminishing Returns
Holding at least one productive input fixed, adding more of another input will eventually increase output by progressively smaller amounts, even while total output may continue to rise.
Perverse-incentive heuristic
Cobra Effect
A policy can worsen the problem it targets when rewards make producing, hiding, or reclassifying the measured problem profitable.