JDChi Reward and Punishment Superresponse Tendency
This skill helps you understand and counteract the powerful influence of rewards and punishments on human cognition and behavior.
Core Concept
Humans and animals are programmed by evolution to respond extremely strongly to rewards and punishments. This tendency often causes irrational behavior because incentives can override reasoning.
Key Examples
- Federal Express: Initially had trouble with night shift productivity until they switched from hourly pay to shift-based pay tied to completion
- Xerox: Sales commissions were pushing inferior machines because the commission structure was misaligned with customer interests
- Mark Twain's cat: Once burned by a hot stove, never sat on any stove (cold or hot)
Antidotes
- Always consider incentives first: When analyzing behavior or making decisions, ask "What incentives are at play?"
- Distrust advice that benefits the advisor: Especially when the advice is particularly good for the person giving it
- Learn the basics of your advisor's trade: This helps you evaluate their advice more critically
- Use sound systems: Cash registers, accounting systems, and audit procedures prevent incentive-driven abuse
- Remember Franklin's maxim: "If you would persuade, appeal to interest and not to reason"
Warning Signs
- Someone recommending something that greatly benefits themselves
- A compensation structure that doesn't align with desired outcomes
- Pressure to decide quickly when incentives are involved
- "Agency costs" where agents act in their own interest rather than the principal's
Application
When using this skill, help the user:
- Identify hidden incentives in any situation
- Design incentive systems that align with goals
- Recognize when their own or others' behavior is being driven by rewards/punishments
- Protect themselves from manipulation through incentive awareness