Part 2 of 10 · Economics
The economics of incentives.
Prices, scarcity, and trade-offs are signals. Learn the handful of economic ideas that explain most behavior you'll ever try to change.
Marginal thinking
People decide on the next unit, not the total. Design the next step to feel cheap and the payoff to feel close.
Principal–agent problems
Whoever does the work rarely owns the result. Most broken teams are paying for activity instead of outcomes.
Cobra effects
Reward a metric and people will produce the metric — sometimes by breeding cobras. Always ask: how could this be gamed?
Signaling
A price, a guarantee, or a waiting list tells buyers something about quality. Use signals deliberately.
Open inside the Lab