An Introduction to the Theory of Incentives;Concept, Methodology, and the Formation process of its Basic Approaches

Document Type : a

Authors

1 Associat Professor, Ferdowsi University of Mashhad

2 PhD Student in Economics, International Campus of Ferdowsi University of Mashhad (responsible

Abstract


 
During the 1950s and 1960s, the theoretical trend in economics, particularly neoclassical economics, was rested on certain assumptions including rational behavior maximization, methodological individualism, and complete information. Some economists believed that such inflexible assumptions caused the failures of neoclassical economics; hence they established a new method for studying and analyzing the economic relations. Instead of using general equilibrium models, their basic idea is centered on partial analyses to clarify the complexities of strategic interactions among economic agents possessing private information. In this approach, a firm is considered as an organizing structure rather than a production function or a technical foundation. In this structure both the formation of a contract among economic agents due to the lack of symmetric information and the ways that lead the agents to make appropriate decisions are analyzed using the incentive theory. This study is mainly aimed at introducing the incentive theory, explicating its operational method, as well as implementing it in empirical contexts.
 

Keywords


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