Scientific Definition
Earn-outs designed to retain founders often demotivate the team they bought.
Plain-English Definition
Earn-outs designed to retain founders often demotivate the team they bought.
Feynman Explanation
We bought the company. They bought our incentive structure.
Core Principle
Earn-outs designed to retain founders often demotivate the team they bought.
Mechanisms
Pending editorial review.
Earn-outs designed to retain founders often demotivate the team they bought.
Pending editorial review.
Pending editorial review.
M&A integration failures rooted in incentive design.
Pending editorial review.
Pending editorial review.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
We bought the company. They bought our incentive structure.
Examples
- Acquired founders gaming earn-out targets at the expense of the acquirer.
- M&A integration failures rooted in incentive design.
Pending editorial review.
Famous Experiments
Pending editorial review.
Design Principles
- Earn-out structures aligned to combined outcomes, not isolated ones.
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.
- Earn-out structures aligned to combined outcomes, not isolated ones.
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.
Funnels rewarded for new logos under-invest in retention and lifetime value.
Cuts that lift margin this quarter erode product quality and brand equity over years.
Narrowly tied bonuses get gamed; people optimize the metric, not the underlying goal.
Re-hires often get raises larger than internal promotions.
Pay tied to stock price encourages short-term price management.
CEO pay tied to size rewards deal-making even when acquisitions destroy value.
Sales forecasts under-set to ensure attainment bonus.
Capital tied to growth rates funds unsustainable scaling and unit-economics denial.
Managers measured by team size grow teams beyond need.
Awards reward visible novelty; quiet excellence goes unrecognized.
Innovation programs designed to signal innovation, not to produce it.
Managers hoard talent; cross-team mobility dies.