In page navigation


Updated: Aug 20, 2021

Rewards or penalties designed to induce one set of economic agents to act in such a way as to produce results that another economic agent wants. As rewards for good results, incentives can include higher pay, better working conditions, better job security, better promotion prospects, or prestige. As penalties for poor results, incentives may take the form of lower pay, worse working conditions, poorer promotion prospects, demotion or sacking, or loss of reputation. Incentives may be applied in response to actual results, such as and disciplinary record. Incentives cannot be based on inputs or outputs unobservable by management. See also export incentives; incentive contract; investment incentives.

Reference: Oxford Press Dictonary of Economics, 5th edt.

Sources & references
Risk disclaimer

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >

James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.