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Evaluating Incentive Structures on a Pirate Ship
Imagine two different pirate ships. On Ship A, the lookout who first spots a prize vessel receives the best pair of pistols from the captured ship, in addition to their regular share. On Ship B, the lookout who first spots a prize vessel receives a fixed bonus of 10 gold coins, in addition to their regular share. Evaluate the relative effectiveness of these two incentive systems. In your answer, judge which system is likely to be more motivating for the lookouts and justify your reasoning by discussing the potential advantages and disadvantages of each approach.
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On a pirate ship, a common rule was that the lookout who first spotted a vessel that was later captured would receive the best pair of pistols from the prize, on top of their normal share. From an economic perspective, why was this rule a particularly effective way to motivate the lookouts?
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The primary economic purpose of rewarding the pirate lookout who first spotted a prize with the best pair of pistols was to ensure a more equitable distribution of the captured wealth among all crew members.
The articles of a pirate ship often included a rule rewarding the lookout who first spotted a prize with the best pair of pistols, in addition to their regular share. Match each component of this incentive system to its primary economic function.
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