Incentives are rewards or benefits offered to motivate individuals or firms to take specific actions. They can be financial (such as tax breaks) or non-financial (such as recognition).
Related terms
Opportunity Cost: The value of the next best alternative that must be given up when making a decision.
Marginal Benefit: The additional satisfaction or utility gained from consuming one more unit of a good or service.
Moral Hazard: When individuals change their behavior due to having insurance against negative outcomes.