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Uri Gneezy on How to Create Effective Reward Systems

Uri Gneezy, an economics and strategy professor at the Rady School of Management at UC San Diego, joins me to discuss his new book “Mixed Signals: How Incentives Really Work.” We explore how we can design reward systems that minimize unintended outcomes and maximize happiness, well-being, wealth, and success.

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It turns out that people are really bad at detecting lies. They make what we call type one and type two errors. They believe stuff that they shouldn’t, and they don’t believe stuff that they should.

Uri Gneezy

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In This Episode, Uri Gneezy And I Discuss His Book: “Mixed Signals.”

Incentives are designed to influence behavior but often fail because they send mixed signals. How do you promote teamwork but reward individual success or encourage innovation but punish failure?

During our interview, Uri Gneezy and I discussed designing effective incentives by aligning them with goals using insights from behavioral economics, game theory, psychology, and fieldwork. He highlights how the right incentives can encourage people to make positive changes, such as driving more fuel-efficient cars, being more innovative at work, and even going to the gym. The key is ensuring the incentives send a clear, aligned signal with the desired behavior.

Listen and learn as Dr. Uri Gneezy and I cover the following subjects:

  • How people make time money trade-offs
  • Why incentives are causing employee disengagement
  • How your example impacts rewards
  • The conflict between what we say and what our body signals
  • The importance of making long-term decisions using incentives
  • The difference between social signaling and self-signaling
  • What you can learn about incentives from Seinfeld
  • How blockbuster got incentives wrong
  • How should we evaluate awards
  • And much, much more!
  • Have any questions, comments, or stories you’d like to share? Drop us a line at [email protected]m!
269 | How to Create Effective Reward Systems | Uri Gneezy | Passion Struck with John R. Miles

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Quote by Uri Gneezy from the Passion Struck podcast on why people are bad at detecting lies

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More From My Interview With Uri Gneezy

During our interview, I asked Uri why there is often a conflict between what we say and what our incentives signal.

Mixed Signals by Uri Gneezy for the Passion Struck podcast recommended book list

Uri Gneezy explains, “Very often, we see this tension between quantity and quality. Another one is between team and individual incentives. So I can tell you Look, we really care about teamwork, you need to work together without cooperating with them, it’s really important.

But then it gives you individual incentives because it’s very easy to measure. And it’s very easy to give. Sometimes it’s better to have people who care only about the best performer, and you should attract the best people and give individual incentives. That’s great. It’s not a mistake.

Sometimes you care about the team and should give incentives to the team. What you shouldn’t do is say I care about the team, but then give individual incentives right. You need to be consistent because the incentives you give send a message that people take to heart R(and) it can confuse them or just leave them following something that you don’t want.”

Resources From The Show With Uri Gneezy

Please note that some of the links on this page (books, movies, music, etc.) lead to affiliate programs for which The Passion Struck podcast receives compensation. It’s just one of the ways we keep the lights on around here. Thank you so much for being so supportive!

My solo episode on why you need to stop chasing perfection:

Want to hear my best interviews from 2022? Check out episode 233 on intentional greatness and episode 234 on intentional behavior change.

My interview with Dr. Scott Barry Kaufman and Dr. Jordan Feingold on Choosing Growth and transcending self-doubt, fear, and anxiety:

My interview with NYU Stern School of Business Professor Scott Galloway on Why America is Adrift:

My solo episode on why micro choices matter:

About Today’s Guest, Uri Gneezy

Passion Struck podcast album cover episode 269 with Uri Gneezy

Uri Gneezy is the Epstein/Atkinson Endowed Chair in Behavioral Economics and professor at the Rady School of Management at the University of California, San Diego. He received his B.A. in economics at Tel Aviv University and Ph.D. in economics at Tilburg University. Gneezy joined UC San Diego in 2006. Before that, he was a professor at the University of Chicago, the Technion, and the University of Haifa. He was a visiting scholar at the University of Amsterdam, NHH Bergen, and Burgundy School of Business.

As a researcher, Gneezy focuses on applying behavioral economics to the real world, where theory can meet application. He is looking for basic research and more applied approaches to studying when and why incentives (don’t) work. His research covers topics such as incentives-based interventions to increase good habits and decrease bad ones, gender differences in reaction to incentives, and how incentives affect deception and ethical behavior in general. In addition to the traditional laboratory and field studies, he is working with firms on using basic findings from behavioral economics to help companies achieve their traditional goals in non-traditional ways.

Gneezy’s research includes over 100 peer-reviewed journal articles, for which he won the Most Highly Cited Researcher prize for the last eight years. He is a coauthor (with John List) of the international bestseller The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life and author of the forthcoming Mixed Signals: How Incentives Really Work.

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John R. Miles is a serial entrepreneur and the CEO and founder of Passion Struck. This full-service media company helps people live intentionally by creating best-in-class educational and entertainment content. John is also a prolific public speaker, venture capitalist, and author named to the ComputerWorld Top 100 IT Leaders.

John is the host of the top-ranked Passion Struck Podcast. The show focused on exploring the mindset and philosophy of the world’s most inspiring people to learn their lessons to living intentionally. Passion Struck aspires to speak to the humanity of people in a way that makes them want to live better, be better, and impact.

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