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An incentive is usually some sort of reward (or a threat of punishment) that persuades a person to pursue a goal.

Many companies use incentives to entice new customers to their business. For example, car manufacturers offer incentives to consumers, such as 0% financing, cash back offers or lifetime warranties, to bring in business.

Of course, the main incentive for Americans is their paycheck. Employers can also try to increase productivity at their firms via "incentive pay". Under incentive pay, performing tasks that go above and beyond one's responsibilities at a firm can result in a bonus for that individual or consideration for a promotion. Performing below expectations can result in less incentive pay, involuntary termination of employment, or the employee leaving the firm, as they are not getting paid as much as their productive counterparts.

Incentives do not have to be financial in nature; studies have shown that non-financial performance incentives can also improve productivity at the workplace.