1. What are they? How do we respond to them?
Incentives
What are they?
How do we respond to them?

2. Incentives What are they?
Anything (a reward or punishment) that forces consumers, businesses and governments to
take an action
Avoid an action
Postive incentives make you better off
Negative incentives make you worse off
What are some incentives to get you to study?
What about incentives to go to work?
What about incentives to stop texting in class?

3. Examples of (positive) incentives
PBIS tickets for helping out in class
Bonus points for winning a vocabulary review game
Rewards benefits for downloading and signing up for a company’s app
Free time
Raise at work
Your ideas?

4. Predicted response: People will obey traffic laws.
Is this a positive or negative incentive? Predict how the individual or firm will respond…
Individuals caught breaking traffic laws face fines or other penalties.
Predicted response: People will obey traffic laws.
Why?
To avoid fines, jail time, losing their license.

5. Is this a positive or negative incentive
Is this a positive or negative incentive? Predict how the individual or firm will respond…
Starbucks offers bonus stars for card holders for purchasing drinks from 2PM – 5PM.
Predicted response: People will purchase more drinks between 2PM and 5PM daily.
Why?
To earn more bonus stars and receive free drinks and food faster.

6. Bonus question:
Why does Starbucks offer customization of their drinks?

7. Is this a positive or negative incentive
Is this a positive or negative incentive? Predict how the individual or firm will respond…
A subsidy is given to firms that develop new products which improve public health or safety.
Predicted response: Firms will develop and produce new and better products to improve health and safety.
Why?
They are being paid to do it. They get to keep the money earned from the sale of their product and it cost them less to make it. Better profits!

8. Is this a positive or negative incentive
Is this a positive or negative incentive? Predict how the individual or firm will respond…
Firms who pollute are fined thousands of dollars each time they do it.
Predicted response: Firms will cut back on pollution
Why?
To avoid fines and loss of income.