https://twitter.com/devonzuegel/status/952407915045859329?s=19

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From Sari Azout newsletter #50

I enjoyed Jack Dorsey’s interview on The Daily, where he acknowledges some of Twitter’s early mistakes: “The disciplines that we were lacking in the company in the early days, that I wish we would have understood and hired for were a game theorist to just really understand the ramifications of tiny decisions that we make, such as what happens with retweet versus retweet with comment and what happens when you put a count next to a like button? Without this expertise, Twitter built incentives into the app that encouraged users and media outlets to write tweets and headlines that appealed to sensationalism instead of accuracy.” 🎙️

Clear examples of problems in incentivisation:

• Employees incentivised with money (traditional; achieving minimum required to reap incentive of wages) vs incentivised with profit-sharing schemes (newer; working towards growth in order to reap incentive of profit-share)
  • The typical management advice on this (see 7 Habits of Highly Effective People excerpt on incentive design)
• Media incentivised for sensationalism, rather than quality or objective truth vs Newsletters
  • etc etc

Recent personal example discovered upon reflection

• A very interesting epiphany: I realised since I set myself the goal of living a memoir-worthy life (see ‣) - I’ve been optimising for experience. And for learning. I notice I considerably feel more inclined to take the travels, try the new cuisine, do the unusual and interesting thing. Because I’m incentivised for it. In a way that I wouldn't be had I just gone for "impact" as my mission. Lots of experiences make a good memoir, which is why I want to travel and do solo trips etc. and learning means I can write a memoir with rich thought processes and everything well and deeply thought out.

Reading material:

• [The Power of Incentives: The Hidden Forces That Shape Behavior](https://fs.blog/2017/10/bias-incentives-reinforcement/#:~:text=The Power of Incentives%3A The Hidden Forces That Shape Behavior,-Reading Time%3A 9&text=Incentives are what drive human,us to make major errors.)

• Window tax

  The window tax - Marginal REVOLUTION

• The Psychology of Human Misjudgment, by Charlie Munger

Mental models for incentive design

• Goodhart’s law: measure should not itself become the target

  From David Perrell:

  The most famous example comes from the Soviet Union. When the factories were given targets for how many nails they needed to produce, they make small and useless nails. Then, when they were measured on the basis of weight, they made a few giant nails. Before the measure, numbers and weight correlated well with the success of a factory. But once they were made targets, the measurements lost their value.

  Likewise, hospitals in Britain were taking too long to admit patients so a penalty was instituted for wait times longer than four hours. In response, some hospitals asked their ambulances to stall or take the long road to the hospital. Even though the roundabout path hurt patients, it shortened hospital wait times.