Final answer:
Negative incentives make actions less likely by altering the cost-benefit analysis, impacting decision-making processes.
Explanation:
Negative incentives have the effect of making an action less likely to be pursued. When individuals face negative incentives, such as increased costs, penalties, or undesirable outcomes, they are discouraged from engaging in the specific action.
For example, if a company faces a heavy tax on a particular product, they may be less likely to produce it due to reduced profits caused by the tax. This demonstrates how negative incentives can influence decision-making and behavior.
In essence, negative incentives work by changing the cost-benefit analysis individuals or organizations make when deciding whether to proceed with a certain course of action.
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