The concept of incentive and restraint mechanism

Incentive and restraint are important contents of modern economics and management, which generally include five basic elements, namely, subject, object, method, goal and environmental conditions. It is to solve the problem of who will motivate and restrain, to whom, how to motivate and restrain, in what direction and under what conditions. Correctly grasping the five elements of incentive and restraint is very important for establishing an effective incentive and restraint mechanism.

Incentive and constraint have different functions, and they complement each other and are indispensable. But the first thing is motivation. Without motivation, there will be no people's enthusiasm, and there will be no economic development. At the same time, everyone should be responsible for his economic consequences, in other words, his behavior should be restrained. In practical work, it is necessary to analyze the specific situation and make an appropriate choice between emphasizing incentives and constraints. Only by combining the two well can we arouse the enthusiasm of operators and achieve incentive compatibility in line with the interests of owners.