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Incentive Design

What a system rewards is what a system produces.

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  • No visual on file
    Incentive Design Entry #0392

    Why a quota changes the composition of output

    A quota specifies a count. Whatever is not counted becomes the cheapest thing to sacrifice, so the total holds while the mix quietly deteriorates.

    Adept
    The hidden part #0392

    A quota does not raise output. It rearranges output around the one attribute that is being counted.

    Open file
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    Incentive Design Entry #0390

    Why free options are consumed wastefully

    A price does two jobs: it raises revenue and it sorts users by how much they need the thing. Remove the price and the second job stops being done.

    Master
    The hidden part #0390

    A price is not only a charge. It is a filter that sorts demand by need, and free resources have no filter.

    Open file
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    Incentive Design Entry #0389

    The reason a rating system inflates over time

    Nobody in the system gains from a low score. When every participant benefits from inflation, the scale compresses upward until it stops distinguishing anything.

    Adept
    The hidden part #0389

    A rating scale does not collapse because reviewers are kind. It collapses because nobody in it profits from a low number.

    Open file
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    Incentive Design Entry #0388

    Why punishing failure removes reporting, not failure

    Penalties attach to the report, not to the event. Reports are voluntary and events are not, so the measurable quantity falls while the underlying one does not.

    Novice
    The hidden part #0388

    A penalty on reports does not reduce the events. It reduces the only record that the events occurred.

    Open file
  • No visual on file
    Incentive Design Entry #0400

    Why removing an incentive rarely restores the earlier behaviour

    An incentive supplies a reason and overwrites the one already there. Withdrawing the payment does not reinstate what it replaced.

    Adept
    The hidden part #0400

    An incentive does not sit on top of the previous reason. It replaces it, and withdrawal leaves the replacement in place with the price set to zero.

    Open file
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    Incentive Design Entry #0399

    The reason a leaderboard demotivates the middle

    A ranking motivates whoever can plausibly move on it. For everyone whose position is settled, it removes the reason to try at all.

    Master
    The hidden part #0399

    A ranking motivates only where position is contestable. For the settled middle it publishes the news that effort will not change the outcome.

    Open file
  • No visual on file
    Incentive Design Entry #0398

    Why deadlines improve output and lower ambition

    A deadline is met by narrowing the work, not by accelerating it. Delivery improves and the discarded scope leaves no record of having existed.

    Adept
    The hidden part #0398

    A deadline does not make work faster. It makes work smaller, and the discarded version never enters the record to be missed.

    Open file
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    Incentive Design Entry #0397

    The reason a promotion can be a demotion

    A promotion is awarded for performance in one job and delivered as a different job. The evidence used to select is evidence about the role being left.

    Adept
    The hidden part #0397

    Promotion selects on evidence from the job being left. Nobody collected evidence about the job being entered, and the acceptance is not that evidence.

    Open file
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    Incentive Design Entry #0396

    Why volunteers outperform paid workers on some tasks

    Payment does not add to an existing reason for doing something. It can replace it, and the replacement is often smaller than what it displaced.

    Novice
    The hidden part #0396

    A small payment does not sit alongside the original reason for doing something. It replaces it, and then has to compete on its own terms.

    Open file
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    Incentive Design Entry #0395

    The reason an unmeasured task disappears

    Effort is allocated across tasks that compete for the same hours. Measuring one of them does not add attention; it moves attention off the others.

    Master
    The hidden part #0395

    Measuring one task does not create effort. It withdraws it from whatever was competing, and the loss is invisible because unmeasured work has no series to fall.

    Open file
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    Incentive Design Entry #0394

    Why a strong guarantee shifts behaviour on both sides

    A guarantee moves the cost of a bad outcome from one party to another. Both parties then face different prices for care, and both respond.

    Adept
    The hidden part #0394

    A guarantee does not remove the cost of a bad outcome. It reassigns it, and every party whose price of care changed will adjust.

    Open file
  • No visual on file
    Incentive Design Entry #0393

    The reason peer review rewards caution

    A reviewer who wrongly rejects is never identified. A reviewer who wrongly accepts is named in the record, and the two errors are not priced alike.

    Novice
    The hidden part #0393

    The two errors of review are not priced alike. A missed discovery is anonymous and a published mistake is attributable, so caution is the cheaper mistake.

    Open file