I am honored to have been asked to present the first Nancy L. Schwartz Memorial Lecture. This invitation was extended without any suggestion of how I might most fittingly pay tribute to Nancy's memory. The only orders were that I present a public lecture, rather than a research seminar. It would, for example, be reasonable for me to review Nancy's scholarly contribution and to place it in perspective. When you recall that her publications included more than forty articles and two books and when you keep in mind the range of the contribution, from the mathematics of optimization to the theory of market structure, you can see that I would have had my work cut out. Alternatively, I could have chosen to present an exposition of recent research on the theory of oligopoly; as you know, Nancy was an expert in this area. But instead of either of these topics, I have decided to speak on the economics of incentives, an area that was not at the center of Nancy's research interest.