Post 9 — The Poppy Problem
Britain offered Afghan farmers money to destroy their poppy crops. The reward created a reason to grow more. Everything that followed made it worse.
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Post 8 — You Get the Cash
Brazil wanted children in school. It paid families when they went. The children went. This is what a reward structure looks like when the incentive and the outcome point in the same direction.
Post 7 — "People Would Not Do This"
What do you call it when the system works exactly as designed?
Post 6 — Eight Is Great
Wells Fargo told its employees what the goal was. It told them, separately, how success would be measured and rewarded. The two were not the same.
Post 5 — Sink or Swim Together
Every year, Amex's senior executives arrived at bonus season prepared to compete — for capital, recognition, a bigger share. They competed hard. The competition was with each other.
Post 4 — Eddie Lampert Knew Exactly How Free Markets Work
Eddie Lampert believed free markets make companies efficient. So he built one inside Sears — 30 autonomous business units, each competing for the same resources, each with its own P&L. He was right that it would work. He was wrong about what “working” would produce.
Post 3 — Playing to Lose
On a July night in London, spectators watched Olympic athletes serve into the net on purpose. Eight players were disqualified for it. The tournament format had made losing the rational thing to do.
Bonus Post — A Bottle Is a Bottle
Connecticut doubled its bottle deposit to lift a falling redemption rate. The rate rose. So did the number of containers arriving from states that had never paid the deposit.
Post 2 — How to Win a Lawsuit and Lose a Sport
The Attorneys General won the fight for transfer freedom. NIL rights had already opened the door. Nobody anticipated what the reward structure would do next.
Bonus Post — What's Your Target?
For the second year running, every finalist in both draws of the world squash championship came from one country. Egypt does not import talent or outspend its rivals. It built a structure that answers one question.
A bonus post is coming Wednesday, June 10. Here's why it couldn't wait.
A reader sent me a case. James McDonough lives in Connecticut. He recognized the pattern unfolding in his own backyard and took the time to bring it here. That is precisely the kind of observation this newsletter exists to surface. Thank you, James. In 2024, Connecticut doubled its bottle deposit
Post 1 — When the Metric Became the Mission
Every reward system faces the same risk: the metric can be satisfied without producing what the metric is supposed to measure.
Incentive Architecture
A bonus post is coming Wednesday. Here's why it couldn't wait.
Most of what I write here is about systems that produced the wrong behavior. Boards that burned heat into empty buildings. Banks that rewarded accounts instead of relationships. Organizations that hit their targets and destroyed their objectives in the process. This Wednesday is different. On May 16, an 18-year-
Incentive Architecture
Post 0 — What do Wells Fargo, a UK heat program, and Israeli daycares have in common?
A bank, a heat subsidy and a group of Israeli daycares have almost nothing in common. Each built a system to change behavior. Each got precisely what it rewarded, and none of them got what they wanted.
Incentive Architecture
Start here.
Every system produces exactly the behavior it rewards. Not the behavior it intends. Not the behavior it describes in the mission statement. The behavior it rewards. That's the thesis. Three words: behavior follows rewards. This publication is built around that idea — applied to real decisions, real institutions, and