Relational incentives theory – How social relations and incentives interact

What is it about?

How do incentives and social relationships interact? When and why do incentives backfire? How can incentives shift relationships? We offer a framework for systematically thinking about and studying the interactions between incentives and relationships (4 relational models, which fit 4 incentive schemes). We demonstrate how incentives can be used to shift relations to a new mode. We also argue why focusing on the incentive means (especially the distinction between non-monetary vs. monetary incentives) may be less important for understanding incentive backfiring effects than focusing on the schemes (the structure of the incentive). When the schemes fit the relational structure, incentives are effective. When they are incongruent, we see backfiring effects on effort and the relationship.

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Photo by Mitchell Luo on Unsplash

Photo by Mitchell Luo on Unsplash

Why is it important?

Our life is built around coordinating efforts with others – at home, at work, and in our neighborhoods and communities. We commonly incentivize others to do things, while also aiming to sustain and shape our relationships with them. Getting incentives right has important implications for productivity and human wellbeing. This theory provides a framework for studying incentives and social relations, yielding many interesting predictions for future empirical research to test.

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