Incentives

An incentive is the payoff — money, status, safety, convenience — that makes a behavior rational for the person doing it.

Incentive analysis means explaining behavior by:

1. Identifying who is actually paid, promoted, or protected by the current outcome.

2. Assuming people respond to their own payoff, not to the stated goal.

3. Changing the payoff before trying to change the behavior.

Behavior that looks irrational usually makes sense once you find who is being paid.