Incentives: Difference between revisions
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Incentive structures are they systemic ways in which we provide positive and negative [[feedback]] to the participants in that system to get them to do the things that make the system work. | [https://en.wikipedia.org/wiki/Incentive_system Incentive structures] are they systemic ways in which we provide positive and negative [[feedback]] to the participants in that system to get them to do the things that make the system work. | ||
Our brains are controlled by these incentives, and [https://en.wikipedia.org/wiki/Stanford_prison_experiment study] after [https://en.wikipedia.org/wiki/Milgram_experiment study] has shown that even the most willful of us are powerless against them. | Our brains are controlled by these incentives, and [https://en.wikipedia.org/wiki/Stanford_prison_experiment study] after [https://en.wikipedia.org/wiki/Milgram_experiment study] has shown that even the most willful of us are powerless against them. | ||
Revision as of 08:26, 22 January 2021
Incentive structures are they systemic ways in which we provide positive and negative feedback to the participants in that system to get them to do the things that make the system work.
Our brains are controlled by these incentives, and study after study has shown that even the most willful of us are powerless against them.
Perverse incentives occur when these systems unintentionally encourage the opposite of their desired outcome. The most egregious examples of waste, fraud and abuse in history come when the rewards for doing wrong outweigh the rewards for doing good. This is further complicated by our brain's tendency to favor immediate rewards over long-term consequences, increasing the saliency of the temptation to cheat.
Our day to day lives and habits are controlled by the incentive structures we put around us. Temptations aren't avoided with willpower, but with willful avoidance. In order to make any change you want to make, you must first change your environment so that change is rewarded and alternatives are discouraged or ignored.
Creating a better society can only be done by changing the incentive structures of our economy and government. Justice is only achieved through elaborate checks and balances to balance the strong incentives to cheat that all parties have.