Final answer:
To protect against opportunism, firms primarily use contracts to legally bind obligations and build trust through past interactions and reputation. In addressing concerns about a cause, purposive incentives work by appealing to personal values. Preventing free riding is a technique to resolve the tragedy of the commons, ensuring fair resource contribution and maintenance.
Step-by-step explanation:
Addressing opportunism in a business context typically involves implementing measures to safeguard against self-interested actions that could be detrimental to a firm or a cooperative arrangement. Contracts and trust are the primary options for protecting your firm against opportunism. Contracts are formal agreements that detail the obligations, rights, and penalties for all parties involved, which can deter opportunistic behavior by making it expensive or legally challenging. Trust, on the other hand, is built on a foundation of past interactions and reputation, encouraging parties to cooperate based on mutual respect and the anticipation of long-term benefits.
Regarding what type of incentives appeal to someone's concern about a cause, the correct answer is purposive incentives. These incentives draw individuals to participate or contribute based on the alignment with their values or beliefs about a particular cause or goal, as opposed to material gains.
Resolving the tragedy of the commons, a situation where individual users deplete or spoil a shared resource through collective overuse can involve multiple techniques. One such technique is preventing free riding, which means implementing measures that discourage individuals from benefiting from the resource without contributing fairly to its maintenance or to the costs associated with its consumption.