In short, if we socialize the costs of fighting piracy, we create both an incentive problem and an information problem.
The incentive problem comes from the fact that shippers have incentives to be careless since they can expect a taxpayer-funded military to come to their rescue.
Maybe the public-sector premium arises from an incentive problem and hence higher public-sector pay can be used as an indicator of poor quality in this sector.
Another incentive problem also arises from lack of transparent pricing.
The incentive problem may not apply just to executives.
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Neither side has much incentive to fix the problem before 2012 as part of a longer-term deal.
Such a law drives responsibility upstream where it belongs and moreover serves as a strong incentive to solve the problem at source (through greener, toxic-free design) of products that can be recycled readily and safely anywhere on earth.
On both sides of the transaction, there is an incentive to find ways round the problem.
The most worrisome smart-technology projects start from the assumption that designers know precisely how we should behave, so the only problem is finding the right incentive.
And she recommends that the millions in civil damages awarded in brutality cases be paid not by city governments, as now, but by the police departments themselves, giving police chiefs a financial incentive to identify and punish or dismiss problem officers.
TLDs will simply exacerbate the problem of shortage economics that provides the incentive to cybersquat in the first place.
But Schneier warns that education isn't any more likely to solve the problem, because users have no direct incentive: A subtle zombie sends spam at other users without victimizing its host.
And a little publicity and financial incentive gets some of the greatest untapped minds to start thinking about a problem they may have never thought they could solve, until now.
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So the potential increased exposure for Eurozone taxpayers of between 50bn euros and 120bn euros is sufficiently large to provide quite a big incentive for the British government to argue that Greece isn't its problem.
The problem with this is that, while it provides a strong incentive for experienced teachers to stay in teaching longer than they might otherwise, it makes teaching unattractive to young people who are more concerned about supporting new families than about their retirement.
Where we have a real problem is in not for profits: where there is no such incentive.
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Securitisation created a serious agency problem, leaving loan originators, who were paid up-front, with no incentive to avoid bad credits and every reason to piggyback inappropriate products onto good ones (in one particularly depressing tale, a retired postal worker whose mortgage is almost paid off is switched to an interest-only product that leaves him in danger of losing his home).
"It's definitely a problem, but when brokerages are banned from using research for marketing, there isn't much incentive for them to cover smaller firms, " says Louis Thompson, chief executive of the National Investor Relations Institute.
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