An incentive is something that motivates or encourages a person or group to take a particular action or to behave in a certain way. Incentives can be positive or negative and can take many forms, including financial rewards, prizes, recognition, or social approval.

In the context of business or economics, incentives are often used to influence consumer behavior or to motivate employees to increase their productivity or meet certain goals. For example, a company may offer a bonus or commission to sales staff who exceed their sales targets, or a government may offer tax credits or subsidies to businesses that invest in renewable energy technologies.

Incentives can be effective tools for achieving desired outcomes, but they must be carefully designed and implemented to ensure that they are fair and equitable and do not have unintended consequences. For example, a poorly designed incentive scheme may lead to unethical behavior, such as cheating or gaming the system, or may result in unintended negative impacts, such as environmental degradation or social inequality.