The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Incentive Contracts

  • Edward P. Lazear
Reference work entry


Incentives are the essence of economics. The most basic concept, demand, considers how to induce a consumer to buy more of a particular good; that is, how to give him an incentive to purchase. Similarly, supply relationships are descriptions of how agents respond with more output or labour to additional compensation.

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Edward P. Lazear
    • 1
  1. 1.