Final answer:
Incentives typically involve rewards and/or penalties, with purposive incentives appealing to one's beliefs or causes. Behavioral economics acknowledges the limits of self-control and uses nudges to promote rational behavior, contrasting traditional economics.
Step-by-step explanation:
Incentives always involve rewards and/or penalties. They are a crucial element in understanding human behavior, particularly within the realm of economics and psychology. Purposive incentives are those that appeal to someone's concern about a cause, aligning with personal or organizational goals and values. Unlike material incentives, which involve tangible rewards such as money, purposive incentives are intangible and relate to intrinsic motivations. Moreover, traditional economists' assumptions often ignore the lack of self-control in human behavior, leading to irrational decisions such as overpaying on taxes to encourage savings. As a response, behavioral economics introduces 'nudges' to gently steer people towards more rational decisions, like automatic enrollment in retirement savings plans to combat procrastination.
CORRECT QUESTION:
incentives always involve ____________. *
a. Predicting human behavior
b. Monetary compensation
c. Ignoring intentions
d. Rewards and/or penalties