Self-Interest, Altruism, Incentives, & Agency Theory

SELF-INTEREST, ALTRUISM, INCENTIVES, & AGENCY THEORY Michael C. Jensen Harvard Business School MJensen@hbs.edu Abstract Many scholars, occupancy people, policy makers, and religious leaders are suspicious of egocentrism and incentives and often oppose the use of incentives to proceed managers, employees, public servants, or the public itself. I address here some of these issues regarding serviceman nature and organizations raised by Michael Brennan (1994) in Incentives, Rationality, and Society. I go the meaning and role of incentives in the logic of choice and point that it is inconceivable that purposeful actions can be viewed as anything different than responses to incentives. Money is not always the best way to motivate people. But where money incentives are required, they are required on the button because people are motivated by things other than money. expediency does not mean that people have no altruistic motives. And self-sacrifice, the concern for the well-being of others, does not make a soul a perfect agent who does the bidding of others. This means that effect problems cannot be solved by instilling greater altruism in people (even if we could do so). I also cover the universal tendency of people to behave in non-rational ways.

though they are Resourceful, Evaluative Maximizers (the REMM model) humans are imperfect in the sense that they have inherited a brain that is biologically structured so as to blind them from perceiving and correcting certain types of errors, principally those that cause emotional or psychic pain. The result is systematic, non-functional appearance that makes them worse off. I briefly discuss a painfulness Avoidance Model (PAM) that complements REMM by capturing the non-rational component of human demeanour. This non-rational, behavior is the crux of self-control problems that beset all humans. Recognizing these self-control problems leads to an expanding upon of agency theory since they are a second study source of agency costs in addition... If you want to capture a full essay, order it on our website: Orderessay

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