Carrots and Sticks
Unlock the Power of Incentives to Get Things Done(amazon)
Ian Ayres (View Bio)
Hardcover: Bantam, 2010.
Behavioral economics can help us supercharge incentives by identifying when carrots are likely to work better than sticks. Though losses may loom large, sometimes contingent rewards can be even more effective. CARROTS AND STICKS show when contingent rewards work better than punishments, and where contracts work best with both carrots and sticks—punished if you fail as well as rewarded if you succeed. For example, some dieters have been entering into pari-mutuel commitments to lose weight, where they forfeit money if they fail to lose weight, but potentially receive the forfeiture of others who fail to lose. Some stop smoking contracts also have this feature.
To be effective, incentive contracts need not only to tailor the right kinds of stakes, but to choose the right goals. A growing number of studies suggest that indirect and partial goals can be very effective at sustaining long-term change. If you want to lose weight, you might be better off just committing to report your weight once a week, as mindfulness is particularly useful in getting people to commit to the initial contract.
Author of the international bestseller SUPER CRUNCHERS, Ian Ayres brings the central insights of behavior economics alive through sustained story telling. We learn about the personal lives of men and women who have used these insights to their advantage, as well as how they are being used by business.