📄 61 — Incentive Structures
Definition
People respond to incentives — and the structure of those incentives often determines behavior more than rules or intentions.
When to Use
• Organizational design • Policy creation • Team management • Market analysis • Behavior prediction
How It Improves Reasoning
It reveals why people act the way they do and how to shape behavior effectively.
Steps
- Identify explicit incentives.
- Identify hidden or unintended incentives.
- Predict behavior based on incentives.
- Adjust incentives to align with desired outcomes.
Example
Sales teams paid only on revenue may ignore profitability.
Prompts
• “Analyze the incentive structure driving this behavior.” • “Redesign incentives to align with desired outcomes.”