FreeEconHelp.com, Learning Economics... Solved!: incentives
Showing posts with label incentives. Show all posts
Showing posts with label incentives. Show all posts

8/13/18

Self-Interest vs Social Interest, the invisible hand and resource allocation

07:52
Self-Interest vs Social Interest, the invisible hand and resource allocation
wikipedia
This article was updated in August of 2018 to include new information and examples.

The self-interest vs. social-interest debate began with Adam Smith over 200 years ago and is one of the primary arguments made in favor of capitalism vs. other types of economies.

Self-interest is when individuals make decisions that are in their own best interest.  Like when you decide to get up in the morning to go to work and make money, or when you pay the grocery store for food that you would like to eat.  Other examples of self interest include trying to win at sports (for example coming first in a race) or eating the food that is on your plate rather than sharing it. A final example of self interest could be picking up money on the street or using coupons to get a discount at the store--an altruistic individual (someone not acting in their own self-interest) would not take advantage of these opportunities.

6/29/11

An example of microeconomics and social interest, a study of Facebook.

14:00
An example of microeconomics and social interest, a study of Facebook.
Within economics we try to establish the difference between self and social interest.  Facebook gives us a prime example of the two working together.  In fact, any real business model that can blend these two interests together will probably be very successful.  First, consider your own self interest in visiting a facebook page, you want to keep in touch with your friends, share photos, let people know what's going on.  At the same time, the creators of facebook are trying to find some where they can invest their money hoping to receive a good return on it.  These creators are also acting in their own self interest. 

6/10/11

Why incentives matter, discussing Obama's policies and the NFL Lockout

11:53
Why incentives matter, discussing Obama's policies and the NFL Lockout
Economics can explain a lot, it can explain why you got out of bed this morning, to why nations go to war.  Economics explains why the housing and job markets are so bad right now, and why Obama's plans are failing.  But we have to figure out what the incentives are and identify them.

wikipedia


While economics is the science of resource allocation, that is just the motivation.  What you should be interested in is why people and organizations behave the way they do, and that is motivated by incentives.  Every day we are faced with incentives, when our job provides us with free parking, that is an incentive to drive to work.  I work at a University where parking is about $10.00 a day, so I have an incentive to not drive to work, which I don't, I bike.  We have incentives to eat fast food because it is fast and cheap.  We have incentives to be nice to our neighbors so they will be nice back.

A lot going on in the world today can be understood if we