What is incentive?

An incentive is anything that changes the payoff of an action, such as pay, a fee, a deadline or a recognition. It matters because people and organizations respond to what is rewarded, and a system's results often follow from its incentives more than from its stated aims.

How it works

An incentive works by changing the comparison between options. A bonus raises the gain from one option, a fine raises the cost of another. The decision maker weighs the change and moves toward the option that now looks best. The size matters, but so do clarity and timing: a reward that is vague or far away has less pull.

Incentives also interact with what is measured. People respond to the rule as written, not to the intent behind it. A good design therefore asks what behavior the rule will actually produce, including any shortcuts that satisfy it without reaching the goal.

Example

Say a call center pays agents a flat 100 per day and wants more calls answered. It adds 2 per call above 40 calls. An agent who handled 40 calls now has an extra reason to take 50, which would raise pay by 20. If the average call takes 10 minutes and the extra calls need 100 minutes more, the agent weighs 20 against the extra effort. Raising the rate to 3 per call makes the extra work more attractive. The numbers are an illustration.

How to model it in Machinations

Create a Pool for agent pay and a Source for calls answered, with a rate set by a Register that increases with the bonus per call. Link the bonus Lever to the Register through a state connection. Add a Drain for the cost of paying the bonus and a Pool for company value from calls. Play with the bonus at several levels and chart calls and net value to see where the incentive pays for itself.