The Power of Incentives and the Impact of Expectations on Human Behavior

Aviral Vaid

Aviral Vaid

Mar 29, 20244 min read

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The Power of Incentives and the Impact of Expectations on Human Behavior

Incentives: The Most Powerful Force In The World

It is often said that incentives are the most powerful force in the world. While this may seem like a bold statement, it holds a lot of truth. People are not calculators; they are storytellers. The complexity of the world and the overwhelming amount of information create blind spots that prevent us from accurately calculating how everything works. This is where stories come in, simplifying complex problems into a few simple sentences that we can easily understand and relate to.

When it comes to incentives, they can take various forms. Financial incentives, for instance, may seem like the most common and effective way to motivate people. However, cultural and tribal incentives often have a stronger hold on individuals. People support certain things not necessarily because of financial gain, but because they don't want to upset or be banished from their social group. These cultural and tribal incentives can be incredibly seductive, leading good and honest people to engage in behavior that may seem crazy to outsiders.

The danger lies in underestimating the power of incentives and how they can shape our behavior. It's easy to believe that we would act differently if put in certain situations, but the truth is, our incentives play a significant role in determining our actions. A thought-provoking question to ask ourselves is, "Which of my current views would change if my incentives were different?" This allows us to reflect on how our perspectives and decisions are influenced by the incentives we face.

Expectations and Reality

Another aspect that greatly influences human behavior is the relationship between expectations and reality. Surprisingly, people tend to get more excited when they are surprised, rather than when something big happens or when they find the right answer. This is because the real value lies in the gap between expectations and reality. It is this gap that generates all the emotion and excitement.

Often, we take things for granted because their value is not directly tied to monetary transactions. Our eyesight, relationships, and freedom are examples of things that we may overlook or underestimate because they don't involve money changing hands. Human beings have an almost infinite capacity for taking things for granted, and it is only when our expectations are shattered that we truly appreciate the value of what we have.

It can be challenging to distinguish between high expectations and motivation. While low expectations may feel like giving up and minimizing our potential, it is important to realize that most good outcomes come from a minority of the actions we take. It is normal for most of what we do to not work out as planned. By understanding this, we can align our expectations with reality and avoid unnecessary disappointment or feelings of failure.

Actionable Advice:

  • 1. Reflect on your incentives: Take the time to analyze the incentives that drive your behavior and decision-making. Consider how your views and actions might change if your incentives were different. This self-reflection can provide valuable insights into the motivations behind your choices.
  • 2. Embrace surprises: Instead of focusing solely on achieving big goals or finding the right answers, learn to appreciate and embrace surprises. The gap between expectations and reality is where the true value lies. Allow yourself to be open to unexpected outcomes and find joy in the unexpected.
  • 3. Manage your expectations: Understand that not everything will work out as planned and that most good outcomes come from a minority of actions. Avoid setting unrealistically high expectations for yourself and others. By aligning your expectations with reality, you can minimize disappointment and maximize your potential for success.

In conclusion, incentives and expectations play vital roles in shaping human behavior. Incentives, whether financial, cultural, or tribal, have a powerful influence on our actions and decisions. It is important to recognize the potential impact of our incentives and question how our views would change if they were different. Similarly, understanding the relationship between expectations and reality can help us appreciate the value of what we have and manage our expectations effectively. By reflecting on our incentives, embracing surprises, and managing our expectations, we can navigate the complexities of human behavior and make more informed choices.

Resource:

  1. "Incentives: The Most Powerful Force In The World", https://collabfund.com/blog/incentives/ (Glasp)
  2. "Expectations and Reality", https://collabfund.com/blog/expectations-and-reality/ (Glasp)

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