Incentive theory

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Incentive theory in organizational theory, is a concept of human resources or management theory. In the cooperate sense, it states that firm owners should structure employee compensation in such a way that the employees' goals are aligned with owners' goals. As it applies to the operations of firms, it is more accurately called the principal-agent problem.

Incentive theory in psychology, treats motivation and behavior of the individual, as they are influenced by beliefs, such as engaging in activities that are expected to be profitable. Incentive theorists tend to distinguish between wanting and liking, where liking is a passive function evaluating a stimulus, but wanting adds an active process "attracting" the person towards the stimulus.^[1]

[edit] References

1. ^ "Psychology", Bernstein, Penner, Clarke-Stewart, Roy, Houghton Mifflin Company, 2006, ISBN 0-618-52718-4.