Use an Example to Describe How Strong Incentive Schemes May

question 21

Essay

Use an example to describe how strong incentive schemes may lead to undesirable outcomes when the gap between "what you pay for" and "what you want" is significant.

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Definitions:

Continental Rifting

Continental rifting is a geological process in which a continent stretches and splits apart, leading to the formation of new ocean basins and rift valleys.

Continental Crust

The layer of igneous, sedimentary, and metamorphic rocks that forms the continents and the areas of shallow seabed close to their shores, known as continental shelves.

Rifting

The process of continental crust being pulled apart, leading to the formation of new oceanic crust and the expansion of ocean basins.

Salt Domes

Geological formations created when a thick bed of evaporite minerals (primarily salt) is pushed upward by the pressure of overlying rock layers.