Introduction to incentive issues

This chapter examines the problem of incentives in relation to conceptual issues having to do with the connection between responsibility and choice. It first considers allocation rules and social orderings, along with social ordering functions as well as Conditional Equality and Egalitarian-Equivalence. It then turns to optimal compensation policies, multiple goods and in-kind transfers, and the possibility of local and global satiation based on the assumption of a single transferable good. It also discusses how incentivecompatible policies inspired by such criteria as Conditional Equality and Egalitarian-Equivalence can work.