Meckling's Theorem

Meckling's Theorem, often referred to in the context of governance and decision-making, essentially posits that individuals, groups, or firms make choices based on their personal interests and the incentives influencing them. This implies that understanding these motivations is crucial for predicting behavior and outcomes. In practical terms, it highlights that when aligning incentives—such as rewards or penalties—organizations can encourage better behavior and decision-making among individuals. It's about recognizing the interplay between individual goals and collective objectives to foster cooperation and effectiveness in various contexts.