Why People Respond More to Incentives Than Intentions.

[Joy- maker]

This topic is broad but i will make it brief and readable, you can do your own research on it. I know most of you have been wondering why people act the way they do, as in they respond more to incentives than intentions. Read this thread to the end and you will understand why, In Economics one of the most powerful ideas is simple but often misunderstood, people respond to incentives more than intentions.

What is incentive? An incentive is something that motivates or encourages a person to do something, it can be money, reward, punishment, recognition and convenience that influence behavior, and what makes incentives so important is the fact that they often provide a better explanation of behavior than intention and morality.

Well, i don't know about you guys but i believe that incentives shape decisions more than good intentions, you are free to share your own believe on this, because most of us believe that decisions are based on logic and value, but in reality, systems of incentives usually have more influence when we check and balance it.

At times you might want to be honest, but if dishonesty is rewarded and not punished behavior may shift, even a trader who knows the risk but if it is the potential reward that pushes behavior towards taking reckless positions then this is a key economic principle that behavior follows structure but not belief.  Don't be afraid to disagree with me, argue with your keyboard.

I want to also bring to our notice that Incentive falls into two categories Positive and Negative incentives.

We have the Positive incentives which has to do with rewards.

Profit
Promotion
Recognition
Access to opportunities

And Negative incentives which has to do with penalties.

Loss of money
Exclusion
Reputation damage
Restrictions or bans

[Maslate]

Intentions can be biased, but incentives are fixed and non-negotiable, so people will definitely prioritize chasing those incentives rather than stick with their intentions. After all, when they have gained satisfaction from those incentives, its as good to say that their intentions have been met and fulfilled as well.

Intentions alone cannot motivate completely a person to take the risk, there should be incentives and rewards on the other side. People would always go for incentives because that's one way of satisfying their greed, intentions are probably aren't that motivational except for those who stick with it no matter what.

[Gozie51]

Well, i don't know about you guys but i believe that incentives shape decisions more than good intentions, you are free to share your own believe on this, because most of us believe that decisions are based on logic and value, but in reality, systems of incentives usually have more influence when we check and balance it.

Well I understand the role of incentives in the work environment, it makes the work force to put in more effort because of the financial gains that will accrue to it through rewards or recognition. But good intention is silent and most times not rewarded or noticed. I think incentive even breed eye service because some people would want to do what they originally would not do. But because they are watched under a lens of incentive, they will swallow their pride and do what is far lesser than their status. I still prefer good intentions but it is hardly rewarded in a setting that is large and heterogeneous because the carrier of good intention is hardly spotted.

[cryptomaniac_xxx]

As what Charlie Munger said"

“Show me the incentive and I'll show you the outcome.”

https://www.goodreads.com/quotes/11903426-show-me-the-incentive-and-i-ll-show-you-the-outcome

We have have good intentions in the beginning, but somewhat along the way we can lose it. While people respond more with incentives, specially if you will be given a reward like in a job. If you do something good, then maybe someone will give you X amount.

And people goes to what they can measure, like in incentive, as I have said, doing Y job = X amount. While intentions, can't be measured, it can't shape a person's behavior because we can't see what the real motive is from behind.

[abhiseshakana]

Agree with you about incentives sometimes become strong factor people respond something but not incentives alone can explain human behavior, how people respond influenced by ethics, culture, education anf value. If a person motivated by single insentive, we can miss or ignoring the true purpose of our action. So we must make a proper and reasonable incentives to avoid bad reaction. because bad incentive design can bring bad behavior. Simple esampe, A teacher loose their real purpose to make student understanding because they pnly focused on examination score. A slaes person who only focus on bonus can forger their actual purpose to get buyer / customer satisfaction. Based on my personal experiences, excessive money incentive often build a bad habit thats why not all human behavior should be motivated by money.

[bitmover]

Charlie Munger was a partner of Buffet, so this is a famous quote.
Incentives are what drive the human behavior. People obey the law and pay taxes because they don't want to get punished. People work because they get paid... and this is how it goes, most of the time in self-interest.

[Opiate32]

Incentives don’t just influence someone behavior, they change overtime. Someone may start with good intentions but if the system consistently reward a different behavior, people will gradually adapt. That is why organizations often end up with culture that reflect what is rewarded rather than what is written in there mission statement.

Changing rules or slogan rarely changes behavior unless incentives changes too.

[shinratensei_]

Incentive is predictable, you do something you get something and everything is clear within a set of rules, intention is vague and you can never know what true intention of people is.
It is simple actually, people respond more to predictable outcome instead of vague intention. If they do something they get something is far easier to follow.

[tabas]

Incentives = motivations
And for that reason, anyone who works hard for salary will be more motivated if he knows that there are a lot of incentives based on their performance. We'd see people work so hard at their best when they know that they can have those rewards. While there are demotivated people and are not encouraged to do more even if there will be incentives because, they know what's enough is enough for them and they don't want to drive more of their efforts into those incentives when they know that there will be competition throughout getting one.

[sonrevelio]

If there are incentives then the person who are doing it will surely do more. As others have said, it's a motivation for people to work more since there's an incentive. In my opinion, there's no one who wants to work with less money. On the poster's post, the main reason is profit and it should be that way.

[Hewlet]

people always want to know what they stand to gain by doing a certain thing and if they know it they then weigh the opportunity they have to forego just to do that same thing. believe this that nothing goes for nothing. there is always an alternative option for someone and what makes them prefer one option over another is basically because of the promised incentive that comes with that thing. take out the merit system from this forum and you will see more off topic post than meaningful post but because of the merit system which is more like a reward based system, you can find out that the reverse is the case.

Even when you are performing an act that you are love and are passionate about, you tend to do even more when the reward you stand to is worth the effort you are putting into the craft.

[Kelward]

I agree with you that a lot of people responds to incentives more than intentions because of the rewards that they will get from the incentives being an extra reward added to what they are supposed to get after completing their normal task. In a simple definition a person might have intentions of working only for 8 hours a day but an incentive can make him to put in extra hours which means that he responded to the incentive more than his original intention.

Although there are people who are very rigid they will not compromise their intentions no matter the amount of incentives that is offered to them because they are contented with what they will get to mantain their intentions or integrity.

[adultcrypto]

Simply put, incentive is measurable, it is directly felt and its what drives actions. On the contrary, intentions are usually not communicated clearly hence, it rarely motivate or encourage people to act. Hence, what influence workforce the most is incentives as that is how people see the value of their time and effort. Even employers try their best to make their incentive as attractive as possible to encourage people to put their best in the job with the aim of increasing overall productivity. Intentions may be genuine in come case but can be misunderstood or not even known which means they will not make any positive impact on the business.

[Solarmesh]

in many real systems people optimize whatever gets rewarded. but i think intentions still matter too, because incentives shape behavior only through the values and constraints people already have, so it’s not purely one-sided.

[Derekfunds]

Op, I really do like your explanations and some insights you gave but you only define/explain incentive alone and i was wondering why you didn't go into detail about intentions since we are trying to compare two words and see their importance. However, I have been trying to fix or picture these two words together to see where they can come together but I could not and you didn't give an illustration for intentions and in what way you are talking about. But honestly, everybody likes incentive even you op do..., it is very difficult to leave something that will give or bring benefit and let it slide.

[Zlantann]

At times you might want to be honest, but if dishonesty is rewarded and not punished behavior may shift, even a trader who knows the risk but if it is the potential reward that pushes behavior towards taking reckless positions then this is a key economic principle that behavior follows structure but not belief.  Don't be afraid to disagree with me, argue with your keyboard.

Let me relate your position to what politicians do. I have seen very good people in private practice who everyone thought would do exceptionally well in public office. I am sure that they had good intentions for society when they were seeking public office. Sadly, when they became political office holders, they changed their intentions. The incentives that corruption brings have motivated them to change their intentions. But in some countries, corruption could lead to extreme punishment, like death. Even when people have the intention to steal money when they have access to public offices. The negative incentives of punishment will force them to change their intentions.

[Woodie]

People given the responsibility of human resource management understand this, and basically its textbook stuff..if you want to see an improvement in productivity then use incentives to motivate employee's,  it can be insurance plans, a work car, free premium membership,  it can be bonus pay for achieving/hitting certain goals etcetera and fortunately for us these are tried and tested adjustments which work ..that is why new human resource managers all go through the same training and results will prove incentives>intentions  , though it should be said that for a personal business intentions are greater than incentives!

[Taricoins]

Inasmuch as i find some sense of reasoning in your post and how convincing it is, I still can't shake the fact that intentions and incentives cannot be separated, for my opinion, I would like to define intentions as the morality of a person like you used as a synonym.

There must definitely be a rule for there to be morality and the concepts of rule brings about the concept of incentives, breaking the rules incites punishment whilst obeying the rules procures rewards. If there is no rule, there is no way to judge someone's morality and vice versa and thesame can be relatable to an economy, this principle involves every actions in our everyday life.

[Findingnemo]

If I am an employee and I am going to get the same fixed salary no matter how much value I bring into the company and someone who does nothing also get the same rewards, then I don't have any reason to bring the results. Corporates know this well that is why they always incentivize the task if possible and keep getting the better results than what they could have achieved with fixed cap of salary.

[Darker45]

I don't know if this is surprising to many, but from where I am this has always been the rule of the game. This is nothing new. It has never been about right and wrong, good or bad, moral or immoral, ethical or unethical, and so on. It has always been about "what's in it for me". Even our heroes followed the same motto. To a great extent, even religion is treading along this line. Why do good things? Because you'll go to heaven.

One thing, though. To be driven by incentives rather than good intentions isn't contrary to deciding based on logic and value. Our sense of logic and value itself is centered on the "what's in it for me" mentality.