Scientific Definition
Agents act in their own interest, not the principal's.
Plain-English Definition
Agents act in their own interest, not the principal's.
Feynman Explanation
Whoever is paid to make the decision is also paid to make a different decision.
Core Principle
Agents act in their own interest, not the principal's.
Mechanisms
Pending editorial review.
Agents act in their own interest, not the principal's.
Pending editorial review.
Pending editorial review.
Misalignment between management and ownership runs almost every dysfunction.
Pending editorial review.
Pending editorial review.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
Whoever is paid to make the decision is also paid to make a different decision.
Examples
- CEOs optimizing for tenure rather than long-term shareholder value.
- Misalignment between management and ownership runs almost every dysfunction.
Pending editorial review.
Famous Experiments
Pending editorial review.
Design Principles
- Align compensation, time horizons, and information access.
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.
- Align compensation, time horizons, and information access.
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.
Once-a-year feedback rewards once-a-year behavior.
The more a quantitative indicator drives decisions, the more it distorts the process it measures.
Donors penalize 'overhead'; charities under-invest in capacity.
Donors penalize 'overhead' and starve capacity that produces outcomes.
A reward designed to reduce X produces more X.
Squeezing all slack from a system optimizes throughput but eliminates resilience.
'Equal value' exchanges incentivize subjective appraisal gaming to trade low-utility land for high-value public assets.
When a measure becomes a target, it ceases to be a good measure.
Deep specialization improves local output but breaks cross-domain understanding.
Greedy improvement loops climb hills that aren't the highest hill.
When rewards don't match stated values, culture quietly decays toward what is rewarded.
Insulation from risk changes the risks people take.