Question

10. What special issues are there related to incentives with which planners working in the worksite setting need to be concerned? How can behavioral economics be used to shape incentives?

Answer 1

Special issues:

Incentives are reward workers for performance and productivity through money.

Incentives include profit sharing plan, paid time off, bonus and cash awards.

Issues:

1. They can extinguish intrinsic motivation.

2. It can diminish performance.

3. Can crush creativity.

4. They can crowd out good behavior.

5. Workers become addictive

6. It foster short term thinking

7. It may cause unethical behavior

Behavior economics shape incentives:

1. Behavior economics attempt to identify and comprehend reason and motivation behind people action and behavior.

2. It helps to remove the obstacles in giving incentives.

3. Behavior economics can guide the incentives plan.

4. It helps in value maximizing decision in incentives.