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Anti-incentives

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Anti-incentives combine commitments and incentives to signal that you care enough about something to turn down money not to do it. Anti-incentives may sound strange but are easily illustrated using a few examples.

The shoe company Zappos, known for excellent customer service, offers employees $2,000 if they quit after the 4-week training programme. Yes, you read that right: they get the money if they choose not to work for the firm. This anti-incentive, an incentive not to work for the company, serves as a commitment device to the firm. By signalling that you do not want the money (to yourself and the firm) you make yourself more likely to stay, knowing that you have sacrificed something to be there. It turns out that only 2–3% take the offer.

What is interesting about anti-incentives is that they are inherently social, since they tend to come with some commitment to other people, whether that’s a group of people or an entire organisation. Assuming the anti-incentive is offered to everyone (which is true at Zappos), everyone will know what you have given up to be there and will take it as a signal that you are committed to the organisation. You will in turn be aware of these expectations and have a desire to fulfil them to avoid letting people down.

Let us reconsider the table of anti-smoking strategies that we covered in the previous activity, but now with an anti-incentive:

  Commitment Incentives Anti-incentives
  Disables choice Guides choice Signals choice
Carrot $100,000 reward for not smoking Give $5 per cigarette not smoked Get offered $500 to quit support group
Stick $5,000 for a cigarette Pay $5 per cigarette smoked Pay $500 to join the support group

The anti-incentive carrot in the right-hand column invites you to benefit financially from leaving the smoking support group. In essence, you are giving up $500 to remain there, which implies that you are the type of person who cares about giving up smoking enough to forgo quite a lot of money. The anti-incentives stick makes you pay $500 to join the support group, which symbolises almost the same thing.

Anti-incentives are a promising new way to change behaviour, though they are not as well understood as either commitments or incentives and we have a lot to learn about them.

Over to you

How do you think the two anti-incentives in the above table are different and will elicit different behaviours?

References

1. Ayres I. Carrots and sticks: Unlock the power of incentives to get things done. Bantam; 2010 Sep 21.

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Behavioural Economics: Employee and Customer Behaviour

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