Get a sense of the prevalence of cheating as perceived by the students. Talk both about deterrence and about prosecution of a cheating chase after detection. Bring back formal and informal and ask whether it matters here. Try to make a connection between what is done about cheating and promotion of learning. Ask if we're cutting off our nose to spite our face. Talk about the role of trust and talk about incentives for both students and faculty.
Talk specifically about incentives for research after mentioning the botch about faculty incentives for teaching and that they are more subtle than I indicated in class the last time. Talk about non-pecuinary incentives like having good colleagues, good facilities, capable graduate students. Talk about why faculty superivise doctoral students and what they get out of it. Then ask whether teaching might be constructed so as to encourage those type of rewards.
Move into pecuniary incentives. Talk about 9-month salaries and the consequences of that. Talk about the faculty member as an entrepreneur.
Then switch modes and get the students to reflect on the style of discussion that day. The goal is for some hybrid where there is some direction from me but still substantial discussion by the students.