Think Like a Freak

by Steven D. Levitt

So while designing the right incentive scheme certainly isn’t easy, here’s a simple set of rules that usually point us in the right direction: 1. Figure out what people really care about, not what they say they care about. 2. Incentivize them on the dimensions that are valuable to them but cheap for you to provide. 3. Pay attention to how people respond; if their response surprises or frustrates you, learn from it and try something different. 4. Whenever possible, create incentives that switch the frame from adversarial to cooperative. 5. Never, ever think that people will do something just because it is the “right” thing to do. 6. Know that some people will do everything they can to game the system, finding ways to win that you never could have imagined. If only to keep yourself sane, try to applaud their ingenuity rather than curse their greed.