At the time of French colonial rule of Hanoi, Vietnam, the government was worried about the number of rats in the city, so they created a bounty program that paid a reward for every rat killed. The arrangement was simple: provide a severed rat tail, and you’ll get a bounty.
It seemed like a decent enough incentive system. But soon, colonial officials noticed something peculiar—rats without tails started to show up in Hanoi.
In a striking demonstration of the importance of second-level thinking, rat hunters would capture rats, sever their tails, and set them free. That way, the rats could procreate and increase the revenue of the rat hunters.
The government had requested rat tails, and they got exactly what they asked for. But in the process, they motivated the wrong behavior and failed miserably in achieving their intended goal. And that makes the Great Hanoi Rat Hunt1 a great example of an incentive system gone awry.
The Psychology of Incentives
Incentives matter a lot. They lie at the root of many situations we face, and yet we often fail to account for them. To get a deeper and more structured understanding of incentives, we’ll turn to behavioral psychology.
If we like the consequences of an action we’ve taken, we’re more likely to do it again. And if we don’t like the consequences of an action we’ve taken, we’re less likely to do it again.
That’s the basic assumption behind what psychologists call operant conditioning: “a learning process through which the strength of a behavior is modified by reinforcement or punishment.”2
If you want to change behavior, there are two primary tools at your disposal, reinforcement, which strengthens the behavior, and punishment, which weakens the behavior. You can think of them as a carrot and a stick.
Reinforcement is the Carrot
Research shows that consistency and timing are crucial for reinforcement. The best way to learn a new behavior is through continuous reinforcement, in which the behavior is reinforced every time it occurs. Meanwhile, the best way to maintain an already established behavior is through intermittent reinforcement, in which the behavior is reinforced only some of the time.
Let’s say, for example, that you want to teach your dog to sit. Initially, the best strategy is to reward every successful attempt. Later, when your dog knows how to sit, it’s better to reward it sometimes.
Punishment is the Stick
Punishment has several issues that generally make it less effective than reinforcement. Firstly, behavior tends to return when the punishment is removed. Secondly, punishment tends to lead to increased fear, stress, and aggression. And thirdly, punishment is a poor guide because it doesn’t tell you what to do—only what not to do.
So when you feel tempted to punish a behavior, remember that it’s usually more effective to manipulate the reinforcers involved instead.
If you want to stop your dog from begging for food, it’s a good strategy to ignore every attempt (no matter how cute) and instead reward it when it doesn’t beg.
“What Are the Incentives Here?”
You generally get the behavior you reward, so whenever you want to change behavior, carefully consider the reinforcers in play. Create an effective incentive system, and the desired behavior will follow.
This article is an excerpt from my book The Decision-Making Blueprint.