Here’s an insight I had about how incentives work in practice, that I’ve not seen explained in an econ textbook/course.
There are at least three ways in which incentives affect behaviour: 1) via consciously motivating agents, 2) via unconsciously reinforcing certain behaviour, and 3) via selection effects. I think perhaps 2) and probably 3) are more important, but much less talked about.
Jon Elster distinguishes these three different ways in Explaining Social Behavior. He first draws a distinction between 1-2 (“reinforcement”) on the one hand, and 3 (“selection”), on the other. He then draws a further distinction between 1 (“conscious rational choice”) and 2 (“unintentional choice”). Here are the relevant excerpts from ch. 11 (emphasis in the original; I have added numbers in square brackets to make the correspondence between your distinctions and his more conspicuous):
In this chapter, I discuss explanations of actions in terms of their objective consequences… There are two main ways in which this can happen: by reinforcement [1-2] and by selection [3]… If the consequences of given behavior are pleasant or rewarding, we tend to engage in it more often; if they are unpleasant or punishing it will occur less often. The underlying mechanism could simply be conscious rational choice [1], if we notice the pleasant or unpleasant consequences and decide to act in the future so as to repeat or avoid repeating the experience. Often, however, the reinforcement can happen without intentional choice [2].
Jon Elster distinguishes these three different ways in Explaining Social Behavior. He first draws a distinction between 1-2 (“reinforcement”) on the one hand, and 3 (“selection”), on the other. He then draws a further distinction between 1 (“conscious rational choice”) and 2 (“unintentional choice”). Here are the relevant excerpts from ch. 11 (emphasis in the original; I have added numbers in square brackets to make the correspondence between your distinctions and his more conspicuous):