Problem 22

Introduction

The term incentive is something that motivates or drives one to do something or behave in a certain way. There are basically 2 types of incentives that affect human decision making.

1. Intrusive incentive.
2. Extrusive incentive.

In economic context, most of the government provide extrusive incentive to the private firms either for the purpose of investment or for research and development as government mostly looks the expertise to conduct research and development by itself.