Mixed Signals: How Incentives Really Work
Uri Gneezy
Yale University Press (2023)
A brilliant analysis of “the interaction of important agendas”
Many years ago, I realized that I could not motivate other people but I could help some people to become self-motivated. True, there are incentives that really work and others that work only some of the time with some of the people. All day, every day, one way or another, we send messages to ourselves as well as to others. All of the data from major research studies in recent years indicate that, during a one-on-one interaction, about 80% of the impact is determined by tone of voice and body language; only 20% (or less) is determined by what is said. Sometimes recipients “get” the intended meaning of a message; more often than not, they don’t. Responses to messages — if viewed as “signals” — are indeed mixed.
In this book, Uri Gneezy recommends thoughtful consideration of “two different approaches to incentives. One simply focuses on the direct economic effect that makes the incentivized behavior more attractive; the more you would pay me to do something, the more likely I would be to do it. The other approach focuses on the indirect effect, which is more complex and can be split into two components: social signaling and self-signaling.”
More specifically, “social signaling captures the concern we have over what others might think of us...self signaling is conceptually similar to social signaling with one fundamental difference: it represents the concern over what we can infer about ourselves from our behavior.”
These are among the other passages of greatest interest and value to me, also listed to indicate the scope of Gneezy’s coverage:
o Credible signals (Pages 17-23)
o How Toyota won the hybrid car market (24-30)
o The value of self-signaling (30-35)
o Incentives/rewards: Quantity vs. quality (45-46)
o Incentives/rewards/Punishments: Innovation (61-69)
o Encouraging teamwork vs. incentivizing individual success (78-89)
o Choosing an incentive’s currency (106-112)
o Framing incentives (106 and 109-115)
o Presocial incentives (123-126)
o Awards as signals (127-135)
o Health care: Use incentives to identify the problem (137-139)
o “Pay to Quit” strategy (156-160)
o Creating habits (173-183)
o Breaking habits (184-195)
o Pulling incentives to work at the negotiation table (243-260)
I congratulate Uri Gneezy on his rigorous and insightful as well as eloquent examination of the probable perils and possible benefits when attempting to communicate effectively with one’s self as well as with others. Some signals succeed. Why? Others don’t. Why not? The answers are in this book.