Incentivisation

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Incentivisation is the practise of building incentives into an arragement or system in order to motivate the actors within it.

Without incentivisation, systems are often counter-productive. For example, taxing people at 98% on all investment income^[1] gives them an incentive not to invest. This has the effects that:

• People stop investing
• The taxes stop being paid (due to people no longer investing)
• The economy behaves poorly (due to lack of investment)

The above is a simple example of negative incentivisation.

[edit] References

1. ^ Paul Graham, "Mind the Gap", http://www.paulgraham.com/gap.html