Relational Incentives Theory

Summary

1. Paper offers a potential unifying theory for Incentive Design — arguing that congruence between the scheme of the incentive and the type of social relationship create positive effects, and that a corresponding incongruence can backfire.

2. Introduces four primary types of incentive schemes — participation, hierarchy, balancing, and proportional — and discusses how they can be applied congruently to four fundamental relational models that had been expounded in previous research — communal sharing, authority ranking, equality matching, and market pricing. (Fiske)
1. Participation — acts and expressions of inclusion in a group. For “communal sharing” relational model.
2. Hierarchy — discretionary awards. For authority ranking relational model.
3. Balancing — acts and expressions that make the recipient even with others in the group. For equality matching model.
4. Proportional — rewards given in a ratio according to the amount that the recipient contributed. For market pricing model.

The manner in which parents and teachers choose to incentivize children, how employers decide to incentivize workers, and the ways that governments select to incentivize citizens will shape our future social relationships and our society as a whole.

Commentary

1. Examples from a wide variety of fields — military, trade, family, business, sports, entrepreneurship.

2. Points out areas for further study. Specific emphasis on questions that should receive more research.
1. Question 1: How do relational preferences and incentive schemes affect how individuals sort into activities, organizations, and occupations?
2. Question 2: When are separable incentives needed, and when is the relationship itself a sufficient incentive?
3. Question 3: What goes on between the end points of the dimensions we treat as if they were dichotomies?

3. Unfortunately my pdf was missing the tables — these seem like they would be very helpful to illuminating and understanding the concepts.

Reference

Using and responding to incentives is an important way for people to signal their relational beliefs and preferences.

While most of our theory’s predictions remain to be tested, below we present empirical evidence from anecdotes, experiments and observational data analyses, which support our premise that people use incentive schemes to effectuate specific relationship structures.

To illustrate the breadth of puzzles and new questions the theory sheds light on, in what follows we cover issues of incentive design at the organizational level, as well as the more informal use of incentives by individuals, such as employees in self- managed teams and private individuals in ‘peer production’ models such as Wikipedia (Benkler, 2006).