Aligning Incentives

Incentive structures work. So you have to be very careful of what you incent people to do, because various incentive structures create all sorts of consequences that you can’t anticipate.

— Steve Jobs

What incentives drive your actions?

I don’t mean this in an aspirational, high-level, mission-statement sense. I mean: How is the value you add to the ​world remunerated? How do you put bread on the table? If you’re rewarded for a particular set of behaviors, you will most likely engage in those behaviors.

Some consultants charge by the hour. They get paid more the longer they focus on a problem. But the client doesn’t want the project to take longer (or cost more) than it needs to. In fact, the client wants a good job done as fast as possible. He or she is driven by different incentives than the consultant; time is usually a key factor. This is a case in which incentives are misaligned.

If you look around, you’ll find many such misaligned incentives. For example, as a citizen, ​you want to be well-informed so you can make better decisions. However, many mass news media are driven by engagement — how long they can keep you around so you can watch more advertisements. Engagement is a very different metric than elucidation; people will write and say outlandish things if they think it’ll make you pay more attention. (And if they get paid more when you do.)

We’ve never before been able to learn so much about what drives people, and instantaneously re-define their contexts based on what we learn about them. Incentive structures become reified in information environments. So when designing an information environment, we should work towards aligning the incentives that drive the environment with the incentives and goals of the people who will use it.