Baseball vs.

Basketball

Baseball is an individual sport that looks like a team sport

• What is best for an individual is also best for the team

The Four Basic Problems with Incentives

1. Risk
a. Uncertainty
b. Employee values certainty, which means having a salary not related to variable
incentives
2. Teams or Free Rider
a. Metric is affected by many parties
b. The more people involved, the more free riding
c. Power of incentives decreases rapidly as the team gets larger
3. Multi-tasking
a. An incentive based on a single effort, would diminish interest in pursuing other
efforts
b. The stronger the incentives are for an individual task, the less teamwork
4. Gaming
a. Intentionally taking an action that is damaging the organization for individual gain
b. E.g. archeologists breaking bones - piece-rate