Lens 1: Incentives

The first Lens of the ICAR Framework is to look at the Incentives trade-off for the agent considering a choice between different behaviors. These are all the elements, Monetary and Non-Monetary that can be considered as Benefits or Costs.

In general, the Incentives form the most important determinant in whether an agent will do a behavior or not. Choice Architecture elements can change how these are perceived but only to an extent.

Marketing can change how people perceive prices as expensive or cheap, but a luxury sports car will nonetheless be too expensive for most people to buy, no matter the amount of marketing used to make it feel cheap.

Similarly, Choice Architecture elements can change the perceived difficulty of a behavior, but only to a point. Filling out a 100 questions online form will be perceived as much easier if you present questions one at a time and not all on one page. It doesn’t change the fact the vast majority of people will abandon filling up that form.

How to approach a rigorous Incentives analysis?

A good starting point to unearth the incentives at play in a situation is the Fogg Behavior Model which breaks out behaviors in terms of Motivation, Ability and Prompts. Motivation and Ability are incentives in the ICAR framework.

Ability items are really costs

The items below form part of the Ability element in the BJ Fogg model but they are really costs to might be present in a situation. Our goal in the ICAR framework is to identify which of these are present and to what extent:

  • Time cost: time is always present as a cost, even if minimal.
  • Physical effort: any physical effort is a cost.
  • Cognitive effort: any cognitive effort is similarly a cost.
  • Social deviance: a behavior that requires a deviation from the norms of the social group with which an agent identifies is a cost in terms of behavior. The analysis needs to identify which social group(s) are relevant and any social norm(s) that apply to the behavior, as well as the net effect if there are competing norms.
  • Non-routine: change is always a cost, with again the extent of it the only element that is to be identified.

Many of these are of course encapsulated in the concept of Ease: how easy or difficult a behavior is to do. Ease is one of the most powerful non-monetary incentives available.

Motivation items can be seen as costs/benefits axes

BJ Fogg identifies the following as part his Motivation element:

  • Pleasure/Pain: obvious incentives, comes in any domain (physical, emotional, etc.).
  • Hope/Fear: any behavior creating one or the other will be more/less easy to have people follow.
  • Social acceptance/Social rejection: if a change in behavioral orchestration creates potential for increased social acceptance or risks of social rejection, then it should be part of an incentives analysis.

Monetary costs and benefits

Of course, Monetary benefits and costs are an integral part of the analysis, if they are present.

Intermittent Variable Rewards

While this list isn’t exhaustive, intermittent variable rewards (i.e. lottery like rewards which provide benefits in a partially randomized way through a series of trials) are powerful enough to merit a special attention.

Please note such rewards can be non-monetary and the autoplay and smart suggestions that form part of our Netflix and Youtube experiences have been likened to such a lottery effect.

They can be very addictive and are also at play when we analyze the Repetition lens as they definitely encouraging multiple repetitions of the same behavior.

Incentive categories to distinguish

There are many ways to slice and dice Incentives but the following distinctions are key.

Monetary vs Non-Monetary

The Monetary elements are straightforward and form the easiest part of the Incentives equation to uncover. Prices paid when buying, income earned, etc

The Non-Monetary elements are much more delicate though the common ones are simple enough. It’s not possible to list them all here but using the

Real vs Perceived

The first distinction to make is between the “real” incentives of a situation and the “perceived” ones.

Real incentives are the elements that should objectively shape our behaviors. For example, the price paid for an item online is a real cost.

Perceived incentives are the incentives as they are perceived by an agent. These can match the real ones but most often they differ. In the example of the price above, we will perceive the price differently if it’s indicated as discounted, the value of such discount, how effective it is communicated, etc.

Costs and benefits are also perceived differently depending on the social groups the agent belongs to, etc.

The Choice Architecture lens can be particularly useful in changing the perceived Incentives.

Certain vs Uncertain

Some incentives will be certain, some uncertain. It’s important to identify the certainty since it has several implications. Among them, we’re reacting differently to uncertainty depending on whether an outcome is framed in terms of losses or gains.

Public vs Private

This distinction is intricately linked to social norms and groups. Some incentives will be public knowledge for everyone within a group. Think about groups within a workplace: salary increases are commonly viewed as benefits by every member of the groups.

Some incentives will be private knowledge though: promotions might not be seen as beneficial by everyone and some might even consider them a negative risk to be avoided.

Tools and Best Practices

If you want to get more details on some of the tools and best practices when it comes to analyzing Incentives, please see the Tools page!