Sean Everett draws on five years designing incentive structures for employees, salespeople, and executives to explain why human emotion and behavior often trump pure monetary incentives. He warns that pay structures create second-order effects most people miss.
Good morning. Let's talk about incentive design as it relates to compensation. So, I spent 5 years designing incentives for employees, salespeople, the board of directors, and executives at some of the biggest companies in the world. The one thing you learn is that people will do exactly what you pay them for, like a computer program. So, if I pay you to do X, You will do X in spite of all the other things. So you have to be careful about second-order effects. And as it relates to Web3, you've seen a lot of white paper incentive designers try to create new types of monetary incentives, economic systems based solely around these monetary incentives. And what we've seen is that they've fallen over because They've taken that to the extreme. They assume in an investing environment that people will, if they get paid for X, do exactly X. But they forget about human emotion and human behavior, which is a stronger force than monetary incentives because it's everything instead of one thing. So, as you think about designing incentives for the system that you built, your company, your economy, Uh, I think that's one piece, but don't forget the human piece because that's often the bigger one. All right, that's it for me. Have a great day.
