Sunday, December 16, 2012

Book Report: Carrots and Sticks

In the spirit of trying to re-kindle my blogging and do more reading, I'm going to start doing periodic "Book Reports" on topics I find interesting.

One of the topics I've always found interesting is What Motivates Us.  I'm still holding out some hope that there's some secret button I can push on myself to motivate me to lose weight, save money, and launch my career ad Football Player/President/Astronaut.  I've taken a crack at a motivation theory myself, base on my own observation and experience.

In his book Carrots and Sticks, Ian Ayres presents a more refined view of how incentives motivate our actions.   He pulls a lot of his ideas from Behavioral Economics and backs up his ideas with experimental results. He's also the co-founder of, which uses these principles to help people reach goals. (He does make a point of mentioning his site, but not to the degree that the book reads as a commercial..)

Main points:

(of course the book has a lot of examples and explanation not covered here)

  • Because we have time-inconsistent preferences, we place a larger value on things we can enjoy now, as opposed to more of the same in the future (aka Hyperbolic Discounting).  This goes beyond rational discounting.  This difference is larger the closer to the actual "now" the decision is made, and is generally regretted after the fact.
  • Your present self (who wants to lose weight, save money, etc.) is often at odds with your future self (who makes the decision to have dessert, buy unneeded shoes, etc.)
  • Commitment devices (like a large cash penalty for "cheating") can take bad options away if set up correctly.
  • Anti-incentives, such as the famous Zappos offer to pay their trainees to leave, can create a greater commitment for those who turn it down.
  • Penalties are usually more cost effective that rewards, as they don't require payment normally and people count losses more heavily than gains of the same amount.
  • People have a strong urge to conform to what others do.  This can be used as an incentive.
  • We have a finite supply of willpower, but this can be increased through "exercise".
  • We have a limited capacity to change, but resetting our "normal" can be the basis for further changes.

My opinion:
I think this book is somewhat underrated based on the Amazon reviews.  It covers a lot of the same ground as Daniel Pink's Drive, but on a more personal level.  I would recommend it.

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