Which common saying best captures the concept of incentives (specifically, positive and negative incentives), which is one of the foundations of economics?

Question

Business

Huynh

5 November, 20:21

Which common saying best captures the concept of incentives (specifically, positive and negative incentives), which is one of the foundations of economics?

+4

Answers (1)

Know the Answer?

Montana · Answer 1

If the carrot doesn't work, try the stick.

Explanation:

This phrase clearly describes how advertising and promotions work:

If the carrot doesn't work: the tempting carrot refers to advertisement, and the doesn't work part refers to advertisement that is not able to change consumer habits and increase sales.

Try the stick refers to offering promotions or positive incentives like discounts or larger packs.

Another example would be the penalty imposed on individuals that refused to purchase health care insurance (eliminated in 2018). The carrot were the benefits obtained by having health insurance and the stick was the negative incentive (or penalty) imposed as a fine for those who didn't purchase health insurance.