Brainhack

4 Reward Upfront

“Loss is nothing else but change, and change is nature's delight.”

Marcus Aurelius

It's been found that people value something more once they own it.

If you give someone a bonus upfront and tell them that they'll lose it if they don't reach a specific target, they're far more likely to reach that target.

A study showed that students gained as much as a 10-percentile increase in their scores compared to students with similar backgrounds if their teacher received a bonus at the beginning of the year. The condition was that the teachers would lose the bonus if their students didn't reach a set target.

But there was found to be no gain for students when teachers were offered the bonus at the end of the school year.

It's been called “the endowment effect”, but I think a better name for it is “the bird in the hand syndrome”.

I remember when I was in advertising and went on a factory visit whilst working on the Mars brand. I learnt two important lessons. Firstly that too much chocolate in the hand, namely mine, made me sick and put me off chocolate for weeks. Secondly, all the Mars employees got a bonus if they clocked in before 8.30 a.m.

But rather than seeing it as a bonus for getting in early, they perceived it as their pay getting docked if they got in after 8.30 a.m.

There have been many experiments that prove this “bird in the hand syndrome”. One found that students were surprisingly reluctant to trade a coffee mug they had been given for a bar of chocolate. ...