ECO 1104 Lecture Notes - Lecture 1: Absolute Advantage, Opportunity Cost, Motivation

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

Economics: the scientific study of complex interactions between individuals (markets, governments, and the environment) Predicts how individuals display behaviour in economic decisions of allocating resources and the consequences of such behaviour. Incentives: inducements to act in a particular way. They are extrinsic or external awards or benefits offered contingent upon outcome. Simple way to communicate to agents that you would like them to alter their behaviour. Studies have shown that intrinsic motivation will decrease over time if extrinsic incentives are introduced for behaviours the individual already finds motivating. Remunerative incentives: come in the form of a material reward (especially money) in exchange for acting in a particular way. Coercive incentives: a promise of some sort of punishment if the wrong decision is made. Moral incentives: occurs when a certain choice is regarded as the right thing to do, or where the failure to act in a certain way is deemed indecent. These are usually based on societies and culture.