Identity Economics is decisions are shaped by who we believe we are — not only by monetary payoffs. It sits in the Identity dimension (IDN) of the Human Behavior Taxonomy™ as element HBT-IDN-0012, within the Economics family. The core principle: decisions are shaped by who we believe we are — not only by monetary payoffs. In incentive terms, it matters because it changes the payoff people perceive before they choose — which means it can be designed for, or exploited.
Scientific Definition
Decisions are shaped by who we believe we are — not only by monetary payoffs.
Plain-English Definition
Decisions are shaped by who we believe we are — not only by monetary payoffs.
Feynman Explanation
People pay real money to keep being the kind of person they think they are.
Core Principle
Decisions are shaped by who we believe we are — not only by monetary payoffs.
Mechanisms
Pending editorial review.
Decisions are shaped by who we believe we are — not only by monetary payoffs.
Pending editorial review.
Pending editorial review.
Pending editorial review.
Pending editorial review.
Brand, role, and culture are identity infrastructure for behavior.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
People pay real money to keep being the kind of person they think they are.
Examples
- Akerlof & Kranton: occupational identity, group norms, and self-concept in economic choice.
- Brand, role, and culture are identity infrastructure for behavior.
Pending editorial review.
Original analysis from The Incentives Lab — how this element behaves inside real payoff structures.
Why this element matters to incentive design
Executives usually notice this element only after it has cost something. By then it looks like a one-off. It is not. The mechanism underneath it is straightforward: decisions are shaped by who we believe we are — not only by monetary payoffs. You can recognize it in the field by its signature: people pay real money to keep being the kind of person they think they are. Every element in the Identity dimension changes the perceived payoff of an action before the action happens, which is exactly where incentive design has leverage.
How it gets exploited
Left undesigned, brand, role, and culture are identity infrastructure for behavior. It is amplified whenever brand, role, and culture are identity infrastructure for behavior. Inside organizations that shows up as brand, role, and culture are identity infrastructure for behavior. The pattern is the same one Goodhart's Law describes: the measurable proxy attracts the effort, and the purpose behind it quietly loses funding.
How the Lab designs around it
The redesign move is to design incentives that fit the identity you want people to enact — or watch them rebel. Watch for it at the boundaries: handoffs, promotions, incident reviews, and budget cycles are where this element gets its power.
Famous Experiments
Pending editorial review.
Design Principles
- Design incentives that fit the identity you want people to enact — or watch them rebel.
Measurement Approaches
Pending editorial review.
Evidence
Pending editorial review.
Pending editorial review.
The Perverse Incentive Lens™
How this behavior is exploited — and how to redesign around it.
- Design incentives that fit the identity you want people to enact — or watch them rebel.
Pending editorial review.
Pending editorial review.
Interactive Mini Network
Click any neighbor to re-center the graph and follow the threads of connection.
Knowledge Graph Neighbors
Auto-linked to the rest of the Human Behavior Taxonomy by family, domain, dimension, and shared keywords.
Evaluating an argument's logic based on whether you agree with the conclusion.
Decisions optimize utility, not value.
Probability × payoff, summed across outcomes.
Exploiting price differences between markets for risk-free profit.
The study of how real humans actually decide — bounded, social, emotional, and inconsistent.
With clear property rights and low transaction costs, parties negotiate to efficient outcomes.
Specialize in what you give up the least to do.
Complements raise each other's value; substitutes lower it.
Fixed costs don't scale with output; variable costs do.
Innovation destroys old industries and creates new ones.
Each additional unit produces less marginal benefit.
How much we value the present over the future.
Where Identity Economics is cited in the corpus
Essays, field guides, and diagnostics from The Incentives Lab that apply this element.
- EssayCulture Is the Residue of Incentives
Identity as an outcome of what gets rewarded.
- EssayIncentive Intelligence
The six dimensions of reading a payoff structure.
- EssayAI Agents Inherit Your Incentives
How this element propagates into automated systems.
- EssayThe Comp Plan Is the Strategy
Where this element meets compensation design.
- ReferenceThe incentive glossary
Definitions for every mental model, bias, and fallacy in the corpus.
- ReferenceThe Periodic Table of Human Behavior
The full 1,267-element map this page belongs to.
Questions about Identity Economics
- What is Identity Economics?
- Identity Economics is decisions are shaped by who we believe we are — not only by monetary payoffs. It sits in the Identity dimension (IDN) of the Human Behavior Taxonomy™ as element HBT-IDN-0012, within the Economics family. The core principle: decisions are shaped by who we believe we are — not only by monetary payoffs. In incentive terms, it matters because it changes the payoff people perceive before they choose — which means it can be designed for, or exploited.
- What is an example of Identity Economics?
- Brand, role, and culture are identity infrastructure for behavior. The Incentives Lab catalogs everyday, organizational, and historical instances of this element on its Human Behavior Taxonomy™ page (HBT-IDN-0012).
- How is Identity Economics exploited?
- Brand, role, and culture are identity infrastructure for behavior.
- How do you design around Identity Economics?
- Design incentives that fit the identity you want people to enact — or watch them rebel.
- Which behavioral dimension does Identity Economics belong to?
- Identity Economics is classified in the Identity dimension (IDN) of the Human Behavior Taxonomy™, family "Economics", class "Mental Model". Its permanent identifier is HBT-IDN-0012 and its evidence grade is B.