Tag Archives: incentives

I few weeks ago I was approached to write an article about “game theory and organizations”…I wasn’t quite sure what to talk about at first, but then I realized that managers play “games” with their employees every time them implement any type of inventive system (or promotion system, for that matter!). So let’s think about the different factors we should think about when structuring incentives in the workplace, both to maximize profitability but also to do right by workers…

A conservative case for welfare economics based on incentives and initiative. Worth a read. It's applicable to a job guarantee.Naked CapitalismIncentivizing an Ethical Economics Simon Szreter, professor of history and public policy at Cambridge University, fellow of St John’s College and co-founder and editor of www.historyandpolicy.org; Hilary Cooper, an economic consultant, researcher, former government economist and senior policymaker; and Ben Szreter, chief executive of a...

I believe that the central problem faced by people struggling for freedom today is the widespread acceptance of Margaret Thatcher’s TINA – the belief that “there is no alternative.” The main things that have led to the acceptance of TINA are the collapse of the state-capitalist regimes that called themselves “Communist” and the widespread failures of social democracy to remake society. The struggles for freedom do not stop because of this, of course. Yet the acceptance of TINA acts to...

[unable to retrieve full-text content]YOU GUYS CHECK OUT THE HOVERTEXT ON THE SITE… Also, more commentary here.

[unable to retrieve full-text content]YOU GUYS CHECK OUT THE HOVERTEXT ON THE SITE… Also, more commentary here.

From a story in Daily Mail: Terror suspects including jihadis returning from fighting in Syria are to be offered taxpayer-funded homes, counselling and help finding jobs to stop them carrying out attacks in Britain. The top-secret Government strategy, codenamed Operation Constrain, could even allow fanatics to jump to the top of council house waiting lists. Official documents seen by The Mail on Sunday reveal that up to 20,000 extremists previously...

 Martin Wolf writes that successful leftism “must recognise the crucial role of incentives in shaping human behaviour.” This is correct. I’m not sure, though, that it is a big argument against Corbynism. This is because actually-existing capitalism itself contains many dysfunctional incentives – ones that constrain innovation and encourage rent-seeking - and Corbynism offer the hope of reducing some of these. I would say that there is a tendency in capitalism (economic liberalism) toward...

[unable to retrieve full-text content]So You Think You Know Golden Parachutes…: Did you know that words mean things? :)

The term moral hazard originated in the insurance business. It was a reference to the need for insurers to assess the integrity of their customers. When modern economists got ahold of the term, the meaning changed. Instead of making judgments about a person’s character, the focus shifted to incentives. For example, a fire insurance policy might limit the motivation to install sprinklers while a generous automobile insurance policy might encourage reckless driving. Then there is Kenneth...

One of the main topics in organizational economics (and economics in general I suppose) is the principal-agent problem- i.e. the misalignment of incentives between one party and another party enlisted to do the first party’s bidding. For example, a small-business owner hires an employee to run things and maximize profit for the owner, but a self-interested employee who is paid a fixed salary would likely rather check Facebook then do whatever it is that would be in the owner’s best interest....