Freakonomics Chapter 1 Summary

Extra Credit Assignment: Freakonomics

“So if sumo wrestlers, schoolteachers, and day-care parents all cheat, are we to assume that mankind is innately and universally corrupt? And if so, how corrupt?” (Levitt and Dubner 43). In my opinion this rhetorical question summarizes Chapter 1’s findings and poses two different sides of an argument. The author finds that cheating is more common when an individual is placed into a win or lose situation. The incentive to cheat is the concept that an individual is getting more for less. So, similarly to how teachers may change their students’ test scores to get a higher pay or praise, sumo-wrestlers might rig matches to obtain a higher ranking. To analyze how incentives cause teachers and sumo wrestlers

Skinner. This process of operant conditioning encompasses the idea that behaviors are fulfilled to either gain reinforcement or evade punishment. This correlates to how incentives suggest that an individuals’ actions are directed towards achieving an award (Cherry). Chapter 1 of Freakonomics relates to managerial accounting by addressing incentives and how they influence behavior. Internal controls typically protect an organization from fraud or abuse. They govern a company’s financial system and monitor procedures. Therefore, with both situations (teachers and sumo wrestlers) described in Chapter 1, internal controls are necessary to monitor cheating and try to stop

I would propose that the more wins a sumo wrestler obtains, the more money he wins and the higher he is ranked. This way, the more matches sumo wrestlers win, the more they are rewarded. Providing this positive incentive of being rewarded more money and a higher ranking for making every match count; no sumo wrestlers will want to simply hand away matches to their competition because it now has a negative outcome on them. Levitt uses crime as another example in Chapter 4 to examine incentive schemes and why more people don’t commit crimes. This is because of the risks or economic, social, and moral punishments associated with the act of committing a crime. So, by implementing rewards and making the punishments more severe for suspicions of cheating, sumo wrestlers will be less likely to cheat. It should be known that if a competitor is discovered to be cheating, their reputation as a wrestler will be ruined, they will no longer be able to compete, and they will be charged a large fine. By employing all parts of the spectrum, economic, social, and moral punishments, sumo wrestlers will find it much more difficult to defy the