Uri Gneezy's latest book unpacks incentives, and how they really work. From charterworks:
We effectively have different “mental accounts” for things we spend on.
Gneezy advises that with real estate, setting the asking price at up to 20% above the expected selling price can have this effect without risking potential buyers just walking away. If you want to develop regular exercise habits, work out with a friend or commit to a personal trainer. Diners in a pay-what-you-want restaurant voluntarily spent more when making their payment anonymously rather than handing it to a waiter. “Being observed by others reduces the value of self-signaling,” explains Gneezy.
Food chain Pret a Manger paid vouchers at promotion and training milestones that employees were required to give to colleagues who helped them. In this case, the social benefits of a small bonus likely outweighed the effects of allowing people to pocket the vouchers themselves.
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