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The theory of incentives: an overview

1983; Cambridge University Press; Linguagem: Inglês

10.1017/cbo9781139052153.003

Jean‐Jacques Laffont, Eric Maskin,

Fiscal Policy and Economic Growth

The theory of incentives is concerned with the problem that a planner (alternatively called a designer, principal, or government, depending on context) faces when his own objectives do not coincide with those of the members of society (whom we shall call agents). This lack of coincidence of goals distinguishes incentives theory from the theory of teams (Marschak and Radner, 1972), which postulates identical objectives, but which otherwise shares many features with our subject. In turn, the assumption that the planner, often the surrogate for society itself, has well-defined objectives separates incentives theory from most of social choice theory, which, since Arrow (1951), examines the possibility of deriving social objectives from those of individual preferences.