An incredible series of incentives with unintended consequences.
0:00 Mao Zedong asked the public to kill sparrows that were eating crops. Their deaths allowed insects to flourish, and locust swarms caused families that killed at least 15 million people.
6:55 kids fund -raising door to door. The teacher wanted to encourage participation, so she set a low minimum threshold that all kids had to meet. Result? Kids who routinely raised far more decided there's no incentive to raise more than the minimum, and total funds dropped dramatically. The incentive undermined the incentive for the most motivated.
14:30 often send a signal about what's most important
15:10 if you give charity donors a gift in return for their donation, subconsciously they see the gift as worth much less than their donation, so they give less subsequently.
16:00 parents were taking their kids out of school to vacation, avoiding crowds and saving on less-crowded accommodation. Suddenly, parents knew there was a price, rather than a moral decision, and they were willing to pay it. Travel companies even stepped in and offered to pay the fine.
17:45 soccer players rewarded for goals and assists. Assists earned less than goals, so players stopped passing the ball to wide-open players.
20:00 when diners split the bill, they are motivated to spend more because their increased spending is diluted amongst multiple payers.
This is the "unscrupulous diner's dilemma." In experiments, it was true for men and women. This may be why restaurants insist on large groups splitting them bill.
22:30 to encourage vaccination, a state government ran a lottery with million dollar prizes weekly amongst vaccine recipients. The unintended consequences was that people subconsciously perceived that there must be dangerous of getting vaccinated, and vaccination rates
24:15 Wells Fargo incentivized tellers to open new accounts for customers. Those who didn't open new accounts knew they were at risk of getting fired for underperformance. 3 million accounts were opened fraudulently, without customers' consent, and 5000 staff were fined. Even the whistleblower was fired.
27:20 in Vietnam, French imperialists installed toilets and sewers. Rats became abundant, so authorities offered 10 cents for each rat tail submitted. People removed tails without killing rats, brought in tails from outlying communities, and even started rat farms to breed as many rats as possible to maximize their incentive, so the plan utterly backfired.
32:20 AMC theaters realized center-theater seats were desirable, so they started charging more for them. Customers were indignant that the already-high prices were raised. If instead they had first raised prices for everyone, then advertised a campaign that offered discounts for understand seats, the perception is that the company is doing what they can to help those who have a hard time paying the new price.
34:30 employees who reached a milestone were given a prize, but with the stipulation it had to be direct on someone else on the team. Instead of teammates being jealous of prize-winners, this incentive helped build team spirit and camaraderie.
36:14 exercise more: if you tell yourself to only try it for a month and then you can quit if you don't like it, you overcome your initial lack of inertia change and get into a routine of where to park, what time to wake up, and how your routine will change.
38:40 switching costs: choosing between brands in the grocery store carries the risk that the new brand won't have the same qualities you're used to. An huge discount may convince a customer to change brands
40:46 you want students to have intrinsic motivation to study and do well, not an incentive. When faced with the challenge of learning touch-typing or doing well on the SAT is hard for a teenager to understand the long-term benefit of, so a well-planned incentive can help.
42:45 educators forced with cutting school hours had to choose either less math hours or less physical education per week. When they reduced math hours, kids enjoyed coming to school, and did better in math.
44:57 if an incentive feels like you're being paid to do a task, a small incentive is perceived as being underpaid and productivity decreases.
46:50 if a boss asks employees if they like their job, they always say yes. But if they are incentivized with a generous severance pay to leave the company, those who are unmotivated do indeed leave. But intriguingly, those who remain and have declined the incentive feel that they need to work harder to justify the fact that they gave up this incentive in order to stay.
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