Seb Yves @sebkipman
Obsessed with the hidden power of incentives — sharing what I learn. Download '17 Power Laws of Incentives' ebook 👇 incentivelaws.com Free ebook ➡️ Joined October 2010-
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Incentives rule everything around you. You can either: Look for them and use them to your advantage. Or ignore them and be taken advantage of.
Threats are a Machiavellian side of incentives. They can be used to get the outcome you want. Beware of their use against you. And use wisely — or not at all.
Disincentives are the other side of the incentive coin: - fines for speeding - jail for crimes - a performance warning at work All just as powerful as positive incentives.
Perverse incentives Ep. 42 - Privatized Prisons When your business model relies on keeping people incarcerated this creates perverse incentives.
The older I get the more I realise the ego incentivizes us to do stupid things.
When biological incentive alone doesn’t work, introduce financial incentives 👇
Adding removalists to this list - just hired them and zero incentive to speed up when pid by the hour
Adding removalists to this list - just hired them and zero incentive to speed up when pid by the hour
3 industries where perverse incentives dictate your experience: 1. Lawyers - the longer a case goes, the more they make. 2. Medicine - Treatment is more profitable than cure. 3. Therapy - the business model relies on weekly sessions for years, not fast resolutions. To change…
The more time there is between the present and when the reward of an incentive is realized, the lesser it’s power to motivate. Eg. Quarterly bonus vs annual bonus.
“I think I've been in the top five percent of my age cohort almost all my adult life in understanding the power of incentives, and yet I've always underestimated that power.” - Charlie Munger
My new life motto: “keep the old out”. (No, it doesn’t mean building a moat impenetrable by rascal scooters…) It means staying young in mind, body and spirit no matter the years that pass.
Committing to do something publicly creates a powerful incentive to do it. The incentive to avoid embarrassment. Or be thought a failure. It’s all ego. But works none the less.
Incentives are incredibly powerful. Beware how you create them. Or there will be unintended consequences.
Incentive Power Law #6 - Beware The Principal-Agent Relationship The principal (eg. Employer) delegates responsibilities to the agent (e.g. employee) to act on their behalf. If incentives aren’t aligned, the agent can act with impunity, knowing the downsides will be suffered by…
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