Authors: Noha Farrag; Hebatallah Ghoneim; Salma Mahmoud
Addresses: Canadian International College, South of Police Academy, Fifth Settlement, New Cairo, Egypt ' German University in Cairo, Main Entrance El-Tagamoa El-Khames, Fifth Settlement, New Cairo, Egypt ' American University in Cairo, Northern 90th Street, Fifth Settlement, New Cairo, Egypt
Abstract: The wide spread moral decay which led to consecutive economic crises in the 21st century has led scholars to seek an ethical economic system. The Islamic economic system (IES), with its ethical foundations, is anticipated to rise as an alternative ethical economic system. The main pillars of this system have been established; however, little attention was given to the incentive and decision-making pillars under an IES. This paper aims to identify the incentive mechanisms that can be utilised to motivate individuals and guide decision-making processes under an ethical IES. Moreover, the paper introduces the 'mystic incentives' mechanism which addresses the spiritual aspects of humans. The use of the 'mystic' incentive among a mixture of materialistic and moral incentives is argued to have implications on both individual and organisational decision making. The paper contends that this mixture of incentives mitigates opportunity cost of choice, principal-agent and asymmetry of information problems.
Keywords: Islamic economics; ethical economics; economic systems; incentives; decision making; principal-agent problems; adverse selection; moral hazard; ethics; Islamic finance; spiritual aspects; opportunity costs.
International Journal of Pluralism and Economics Education, 2015 Vol.6 No.4, pp.340 - 354
Received: 10 Jan 2015
Accepted: 02 Jan 2016
Published online: 08 Apr 2016 *