1 00:00:00,956 --> 00:00:10,537 When we think about the motivation, in terms of salary, the usual assumption, is 2 00:00:10,537 --> 00:00:16,220 that people just want to rest. And if we leave people alone, nobody would 3 00:00:16,220 --> 00:00:18,168 want to work. And because of that, we need to pay 4 00:00:18,168 --> 00:00:20,995 people. Basically the idea is, that people want to 5 00:00:20,995 --> 00:00:25,136 sit on the beach drinking mojitos. But we, as their employers, don't want 6 00:00:25,136 --> 00:00:28,680 people to sit on the beach drinking mojitos, so we have to pay them. 7 00:00:28,680 --> 00:00:32,310 And the payment, it's what's causing the motivation. 8 00:00:32,310 --> 00:00:36,175 The motivation is leading to labor. And the reason people are doing this labor 9 00:00:36,175 --> 00:00:40,140 to start with, so they have enough money to rest on the beach drinking mojitos, 10 00:00:40,140 --> 00:00:44,809 plus to pay bills and so on. But the basic notion is that work is 11 00:00:44,809 --> 00:00:48,058 adversive. That people hate working and the only 12 00:00:48,058 --> 00:00:50,740 reason that people work is to get, to get money. 13 00:00:50,740 --> 00:00:54,720 Now of course, this is not, the real reason. 14 00:00:54,720 --> 00:00:57,492 And as we've talked already, there's lots of other things that are happening in 15 00:00:57,492 --> 00:00:59,654 labor. People find tremendous amount of 16 00:00:59,654 --> 00:01:04,013 satisfaction in labor. In fact, even if you look at rats. 17 00:01:04,013 --> 00:01:08,808 If you look at rats, and you say would rats just want to work if they get food or 18 00:01:08,808 --> 00:01:11,620 do they enjoy working just for its own sake? 19 00:01:11,620 --> 00:01:16,046 Even rats enjoy work for its own sake. So for example in some, eh, all the 20 00:01:16,046 --> 00:01:21,116 experiments on what is called counter freeloading, what is happening is that 21 00:01:21,116 --> 00:01:25,952 rats and mice are given the choice of either getting free food that doesn't 22 00:01:25,952 --> 00:01:30,125 require any labor. Or they have food that requires some 23 00:01:30,125 --> 00:01:31,814 labor. And you know what? 24 00:01:31,814 --> 00:01:36,110 Sure they take some of the free food, but they don't feed on that exclusively. 25 00:01:36,110 --> 00:01:40,410 They also go to the food that requires some effort, and try to get that as well. 26 00:01:40,410 --> 00:01:45,828 So it turns out that even animals are not just about, eh, how much they can get 27 00:01:45,828 --> 00:01:50,670 without working; even animals enjoy work in some important ways. 28 00:01:50,670 --> 00:01:55,224 And you can think about squirrels, you can think about dogs, you can think about all 29 00:01:55,224 --> 00:01:58,463 kind of animals that seem to enjoy working to some degree. 30 00:01:58,463 --> 00:02:02,030 By the way the one exception so far, is the domestic cat. 31 00:02:02,030 --> 00:02:04,763 The domestic cat doesn't seem to enjoy at all, labor. 32 00:02:04,763 --> 00:02:08,130 And if they could do anything with no effort it seems to be, they seem to be 33 00:02:08,130 --> 00:02:11,888 doing it. Okay, so that's the idea that life is 34 00:02:11,888 --> 00:02:17,047 composed by many more motivation than just money alone. 35 00:02:17,048 --> 00:02:21,269 And we talked about meaning and a sense of purpose and a sense of accomplishment and 36 00:02:21,269 --> 00:02:25,499 competition and so on and so forth. But now let's turn our attention to money. 37 00:02:25,500 --> 00:02:28,092 Money is good. Money is also one of the motivators. 38 00:02:28,092 --> 00:02:31,580 The fact that it's only one of the motivators, doesn't mean it's not an 39 00:02:31,580 --> 00:02:34,862 important one, of course, it's a crucial, important motivator. 40 00:02:34,862 --> 00:02:38,567 And, for now I want to talk about one aspect of money. 41 00:02:38,568 --> 00:02:41,940 So one aspect of money, is that we pay people, and they get a salary. 42 00:02:41,940 --> 00:02:45,767 And if they behave well, they get to keep their job, and so on. 43 00:02:45,768 --> 00:02:49,221 But recently, there's been more and more jobs that have bonuses. 44 00:02:49,222 --> 00:02:54,990 And a bonus is a particular form of payment, it's a form of payment that is 45 00:02:54,990 --> 00:02:59,858 contingent on performance. And I want to talk a little bit about how 46 00:02:59,858 --> 00:03:04,537 bonuses work, what is the theory of bonuses and how do they really work. 47 00:03:04,538 --> 00:03:08,970 The basic idea of a bonus is that it, if I offer you a bonus for a particular level 48 00:03:08,970 --> 00:03:13,830 of effort, you would try harder. And because you would try harder you would 49 00:03:13,830 --> 00:03:18,250 be more successful, and therefore I by providing you a bonus can redirect your 50 00:03:18,250 --> 00:03:21,740 effort to be more productive. But is that always the case? 51 00:03:21,740 --> 00:03:26,081 And is it always that case that more bonuses would yield to higher effort? 52 00:03:26,081 --> 00:03:31,929 So there's an old research in psychology on what's called the Yerkes Dodson Effect. 53 00:03:31,930 --> 00:03:36,970 And the notion of that is that if we took incentives, and we took performance, and 54 00:03:36,970 --> 00:03:41,147 we said what is the relationship between incentives and performance? 55 00:03:41,147 --> 00:03:45,857 The usual theory is that as you increase the incentives, performance will go up. 56 00:03:45,858 --> 00:03:49,550 I offer you higher and higher bonus, performance should go up. 57 00:03:49,550 --> 00:03:54,230 Or maybe you could argue, maybe it would go up to a certain level and then it will 58 00:03:54,230 --> 00:03:59,198 have diminishing returns, it look kind of flattened out, because at some point you 59 00:03:59,198 --> 00:04:02,684 can't work harder. But what Yerkes and Dodson argued, and 60 00:04:02,684 --> 00:04:05,978 showed, is that the task actually looked the following. 61 00:04:05,978 --> 00:04:10,466 When you increase incentives people perform better, but above certain level, 62 00:04:10,466 --> 00:04:14,954 performance actually goes down, it's not that is flattens out it actually goes 63 00:04:14,954 --> 00:04:19,050 down. How did Yerkes and Dodson first show this 64 00:04:19,050 --> 00:04:22,356 effect? They took, they put mice in a maze. 65 00:04:22,356 --> 00:04:27,415 And the maze was changing every day. And every day the mice have to learn, had 66 00:04:27,415 --> 00:04:31,800 to learn what are safe areas of the maze and what are dangerous areas of the maze. 67 00:04:31,800 --> 00:04:35,370 So one day maybe the white symbolize safe and the black danger. 68 00:04:35,370 --> 00:04:40,100 And one day stripes were safe and polka dots were dangerous and so on. 69 00:04:40,100 --> 00:04:43,477 And what is safe? Safe is a part of the maze that has no 70 00:04:43,477 --> 00:04:47,560 electrical shock and dangerous is the part that does have electrical shock. 71 00:04:47,560 --> 00:04:50,970 And everyday the mice had to learn what are the safe zones, and which are the 72 00:04:50,970 --> 00:04:55,502 dangerous zones. And over trial, across days, what Yerkes 73 00:04:55,502 --> 00:04:59,337 and Dodson did, was to increase the amount of the shock. 74 00:04:59,338 --> 00:05:01,777 So sometimes the shock was very, very little. 75 00:05:01,778 --> 00:05:04,561 And guess what? How fast did the mice learn when the shock 76 00:05:04,561 --> 00:05:06,704 was very small? Very, very slowly. 77 00:05:06,704 --> 00:05:10,142 What happened when the shock increase in intensity? 78 00:05:10,143 --> 00:05:14,770 As the shocks increase in intensity, the motivation of the mice was higher, and 79 00:05:14,770 --> 00:05:16,234 they learned faster. Right? 80 00:05:16,234 --> 00:05:19,657 All of a sudden it's more informative, it's more useful, it's more beneficial to 81 00:05:19,657 --> 00:05:21,830 learn faster, and the mice were learning faster. 82 00:05:21,830 --> 00:05:27,615 But guess what, at a certain level the shocks became so strong that the results 83 00:05:27,615 --> 00:05:31,562 started backfiring. At a certain level performance did not go 84 00:05:31,562 --> 00:05:36,272 up, and it did not flatten, it actually started getting worse and worse and worse. 85 00:05:36,272 --> 00:05:39,387 And you could probably imagine how it would look for you. 86 00:05:39,388 --> 00:05:44,157 Imagine I asked you to walk around this campus, and I made some buildings safe and 87 00:05:44,157 --> 00:05:47,312 some building dangerous. If the shock was tiny it was 88 00:05:47,312 --> 00:05:52,208 uninformative, it was like so light you would hardly feel it, you wouldn't be that 89 00:05:52,208 --> 00:05:56,804 motivated to learn quickly. As the shock went up, you'd probably care 90 00:05:56,804 --> 00:06:00,708 more about it and try harder and figure out which buildings are dangerous and 91 00:06:00,708 --> 00:06:03,385 which are safe. You would commit it to memory, you would 92 00:06:03,385 --> 00:06:05,772 try to rehearse it, you would do all kinds of things. 93 00:06:05,772 --> 00:06:10,913 But as the shock would become so strong that it will take your breath away, that 94 00:06:10,913 --> 00:06:16,127 you could not do anything else, the fear of the anticipated shock will probably 95 00:06:16,127 --> 00:06:19,156 paralyze you. And you'll probably not be able to think 96 00:06:19,156 --> 00:06:22,326 about anything else. And under those conditions, as the shock 97 00:06:22,326 --> 00:06:26,102 would get stronger and stronger and stronger, your memory would actually go 98 00:06:26,102 --> 00:06:29,172 down. But the results from Yerkes and Dodson 99 00:06:29,172 --> 00:06:35,069 suggest that this idea of increased stakes, increased incentives to learning. 100 00:06:35,070 --> 00:06:41,163 Might have these non linear relationship, this inverse-u relationship, where people 101 00:06:41,163 --> 00:06:45,253 could want to perform better, but actually perform worse. 102 00:06:45,253 --> 00:06:50,538 So, with this, would this work? And the basic idea that we went after, is 103 00:06:50,538 --> 00:06:55,250 that as you promise people more money for higher performance. 104 00:06:55,250 --> 00:07:00,867 As the bonus, potential bonus increases, people want to perform better. 105 00:07:00,868 --> 00:07:04,125 It's not as if, if I offer you a bigger bonus you don't want to perform to a 106 00:07:04,125 --> 00:07:07,334 higher degree. You want to do it more, but the question 107 00:07:07,334 --> 00:07:11,079 is, is it some level of wanting to do something higher? 108 00:07:11,080 --> 00:07:15,559 Can you do it, or does it backfire? If you want to do it with all your heart 109 00:07:15,559 --> 00:07:20,615 and soul and it's the only thing you can do about it, can you actually do the job 110 00:07:20,615 --> 00:07:24,785 better or do the job worse? So how do we test this idea that the level 111 00:07:24,785 --> 00:07:30,047 of bonuses could either positively, or flat, or negatively influence performance? 112 00:07:30,048 --> 00:07:34,740 In the US, it would be very hard for us to afford big bonuses, the kind of bonuses 113 00:07:34,740 --> 00:07:39,550 that people give truly in the work place. So we went to India, we went to some small 114 00:07:39,550 --> 00:07:44,170 villages where people don't make much money and we could give them lots of money 115 00:07:44,170 --> 00:07:47,568 in their currency, that would not be too expensive for us. 116 00:07:47,568 --> 00:07:50,406 And we basically created the following experiment. 117 00:07:50,406 --> 00:07:54,676 We gave people a set of tasks and to some people we said, look, if you, if you 118 00:07:54,676 --> 00:07:59,016 perform these set of takes to these standards, you would get the following 119 00:07:59,016 --> 00:08:01,828 bonus. And if you get it to a higher performance, 120 00:08:01,828 --> 00:08:05,579 you'll get a bigger bonus. So people had two levels of bonuses and 121 00:08:05,579 --> 00:08:10,271 the question is would they perform below the level of the first bonus, between the 122 00:08:10,271 --> 00:08:14,713 level of the first and the second bonus or above the level of the second bonus? 123 00:08:14,713 --> 00:08:17,536 And on top of that we had three bonus conditions. 124 00:08:17,536 --> 00:08:22,832 Some people we promise what we call the small bonus, which was if you don't do all 125 00:08:22,832 --> 00:08:28,032 of these task as well you, as well as possible, the best possible level you will 126 00:08:28,032 --> 00:08:33,312 get one day of your salary, an average day of people's salary in that particular 127 00:08:33,312 --> 00:08:37,299 village. It wasn't a tiny bonus because for one 128 00:08:37,299 --> 00:08:41,508 hour they could get a one day salary, but it was small compared to the other 129 00:08:41,508 --> 00:08:44,605 bonuses. In the second bonus condition, we said, if 130 00:08:44,605 --> 00:08:49,291 you do these tasks well at the highest possible level, you would get two weeks of 131 00:08:49,291 --> 00:08:50,150 salary. Right? 132 00:08:50,151 --> 00:08:53,260 Much, much more. And the third group we said, if you do 133 00:08:53,260 --> 00:08:58,259 these tasks as well as, as possible, you would get five months of salary. 134 00:08:58,260 --> 00:09:02,944 So now think about it. The first group had the maximum bonus of 1 135 00:09:02,944 --> 00:09:06,870 day of salary, two weeks of salary, five months of salary. 136 00:09:06,870 --> 00:09:11,784 Now if they perform half as well, they would get half, a third , a third, and so 137 00:09:11,784 --> 00:09:13,830 on. The question is, how well would they 138 00:09:13,830 --> 00:09:16,278 perform? And how would the relationship look 139 00:09:16,278 --> 00:09:20,762 between these two levels of bonuses? And just think to yourself, if you had to 140 00:09:20,762 --> 00:09:25,580 draw this relationship, imagine a graph and you have to predict what will be the 141 00:09:25,580 --> 00:09:29,157 level of performance. Will performance go up linearly? 142 00:09:29,158 --> 00:09:33,785 Will it flatten out or will it look like the Yerkes Dodson Effect, where mutual 143 00:09:33,785 --> 00:09:36,252 actually go, go down? What, what would you predict? 144 00:09:36,252 --> 00:09:40,685 Well here are the results. We had many different games, and I'll show 145 00:09:40,685 --> 00:09:43,912 you one after the other. The first game was, eh, called the 146 00:09:43,912 --> 00:09:46,880 quarters game. And in the quarter game, people have 147 00:09:46,880 --> 00:09:51,232 multiple pieces of metal that each was like a quarter and you had to fit nine of 148 00:09:51,232 --> 00:09:54,997 them in a particular shape. Eight of them is very easy, nine is a 149 00:09:54,997 --> 00:09:59,742 little tricky and we gave people a time limit and the question was could they do 150 00:09:59,742 --> 00:10:01,900 it in this time limit? What happened? 151 00:10:01,900 --> 00:10:08,697 At the low level of the bonus, about 30%, almost 30% of the people managed. 152 00:10:08,698 --> 00:10:13,320 In the middle of the bonus, slightly more, almost 40% of the people managed. 153 00:10:13,320 --> 00:10:17,559 What happened at the very highest level of bonuses, the five-month salary condition? 154 00:10:17,560 --> 00:10:23,210 Performance went down dramatically. Now, almost nobody was able to do that. 155 00:10:23,210 --> 00:10:26,597 The same result basically appeared in other areas as well. 156 00:10:26,598 --> 00:10:30,434 We had a game called Simon. Simon is a game with four lights, and each 157 00:10:30,434 --> 00:10:35,215 of them is associated with a tone as well. And the machine presses them one after the 158 00:10:35,215 --> 00:10:38,665 other, so you can hear a sound and, and, see a light. 159 00:10:38,665 --> 00:10:42,887 And you have to press it. And then you see two of them, oh. 160 00:10:42,888 --> 00:10:47,312 And then you have to do oh and it goes on like this and it increases by one number 161 00:10:47,312 --> 00:10:51,695 every time for a long, long time until you fail in repeating the exact pattern. 162 00:10:51,695 --> 00:10:55,922 What happened? In the low level condition people were 163 00:10:55,922 --> 00:11:00,750 quite good, the middle level condition they were basically, almost the same, and 164 00:11:00,750 --> 00:11:04,726 then at the highest level of bonus, performance actually went down 165 00:11:04,726 --> 00:11:08,690 dramatically. In this particular game, we didn't see the 166 00:11:08,690 --> 00:11:14,082 increase, we only saw the decease. We had another game we called recall last 167 00:11:14,082 --> 00:11:17,356 three digits. What we did in this game is we read aloud 168 00:11:17,356 --> 00:11:21,250 to people a sequence of numbers, 7, 18, 25, 87, 76, 13, 18, 5, 3, 2, 17. 169 00:11:21,251 --> 00:11:27,265 And then when we stopped in a random place, we said please remember, recall, 170 00:11:27,265 --> 00:11:30,961 tell us the last three ones that we said aloud. 171 00:11:30,961 --> 00:11:38,080 Could you do it? And we gave people many, many chances to 172 00:11:38,080 --> 00:11:40,660 do it and saw how many of them they could do. 173 00:11:40,660 --> 00:11:44,675 What happened? Again no difference between the low level 174 00:11:44,675 --> 00:11:48,742 of bonus an the middle level, decrease for the high level. 175 00:11:48,742 --> 00:11:54,454 Another game we played was Labyrinth, its a game with the plane in front of people, 176 00:11:54,454 --> 00:11:59,158 with the little ball and you can manipulate the plane and shift it in 177 00:11:59,158 --> 00:12:04,233 different directions, And this we get the ball to on a particular path. 178 00:12:04,233 --> 00:12:08,400 And we define a particular version that would get people to perform well, and 179 00:12:08,400 --> 00:12:10,870 another level that would perform very well. 180 00:12:10,870 --> 00:12:17,089 What happened now? As bonus increased, performance just went, 181 00:12:17,089 --> 00:12:19,729 went down. The same thing happened with some dart. 182 00:12:20,862 --> 00:12:24,760 A game. We actually had initially some darts, with 183 00:12:24,760 --> 00:12:29,710 a, a metal point, but we figured out this was too dangerous, so we did a darts game 184 00:12:29,710 --> 00:12:34,430 with tennis ball covered with velcro. Here there was a slight increase between 185 00:12:34,430 --> 00:12:38,568 the low and the middle and a slight decrease between the middle and the high. 186 00:12:38,568 --> 00:12:43,534 Eh, we had another game in which you have to spread two levers and a particular ball 187 00:12:43,534 --> 00:12:48,725 has to go up, and how far can you get it. In this one too we saw no difference, and 188 00:12:48,725 --> 00:12:52,203 then a decrease. And if you look at all the results, and 189 00:12:52,203 --> 00:12:55,034 our task really kind of had three components. 190 00:12:55,034 --> 00:12:59,456 There was a creativity test, there were concentration tests, and there were model 191 00:12:59,456 --> 00:13:02,408 skill tests. Across all of them we basically saw one 192 00:13:02,408 --> 00:13:05,247 pattern. And if you average across all of them, no 193 00:13:05,247 --> 00:13:09,525 difference between the low and middle level, and then decrease at the high 194 00:13:09,525 --> 00:13:12,830 level. It means that as we get to high bonuses 195 00:13:12,830 --> 00:13:18,152 things are not flattening out, they're actually going, going down. 196 00:13:18,152 --> 00:13:23,402 Now, when we started this experiment, we actually had a slightly different, 197 00:13:23,402 --> 00:13:27,115 approach. What we were going to do is we're going to 198 00:13:27,115 --> 00:13:32,080 use a principle called loss aversion. And the idea of loss aversion, is the idea 199 00:13:32,080 --> 00:13:35,030 that people hate losing more than they enjoy gaining. 200 00:13:35,030 --> 00:13:40,230 So if losses are more important than gain, we said maybe we can create even more 201 00:13:40,230 --> 00:13:43,947 stress by prepaying people. So the idea was the following. 202 00:13:43,948 --> 00:13:46,300 People came to the experiment, we prepaid them. 203 00:13:46,300 --> 00:13:50,588 If somebody was in the five months bonus condition, we would give them all the 204 00:13:50,588 --> 00:13:54,860 money in cash to put in their wallet. And then we would say, please perform 205 00:13:54,860 --> 00:13:56,662 this. And if you perform it to the highest 206 00:13:56,662 --> 00:13:59,724 possible level you will give to, you will get to keep all the money. 207 00:13:59,725 --> 00:14:02,980 But if you don't you'll have to give us the money back. 208 00:14:02,980 --> 00:14:08,180 Now financially it's equivalent, but we thought that maybe if people have the 209 00:14:08,180 --> 00:14:11,497 money on them the level of stress would be higher. 210 00:14:11,498 --> 00:14:15,530 And actually the first participant in that experiment, in the five months bonus 211 00:14:15,530 --> 00:14:17,990 condition, completely choked, he was terrible. 212 00:14:17,990 --> 00:14:20,590 He couldn't perform anything. He was trying. 213 00:14:20,590 --> 00:14:22,794 He was trying to focus. He was trying to breathe. 214 00:14:22,795 --> 00:14:25,300 But he was just failing time after time after time. 215 00:14:25,300 --> 00:14:29,440 And when he finished, he had to give us back all of the money. 216 00:14:29,440 --> 00:14:33,630 The next participant was the same. He was trying to you know, concentrate and 217 00:14:33,630 --> 00:14:38,251 focus and do some yoga and meditation. But again, he couldn't do anything 218 00:14:38,251 --> 00:14:41,130 correctly. I have to say that at that point in the 219 00:14:41,130 --> 00:14:45,414 game, which was going so well, I was a little happy because I had, the results 220 00:14:45,414 --> 00:14:49,766 were looking In that direction, that the stress will overwhelming people's 221 00:14:49,766 --> 00:14:53,080 performance. But the second participant did something 222 00:14:53,080 --> 00:14:55,556 unexpected. And at the end of the experiment, when we 223 00:14:55,556 --> 00:14:58,500 asked him to pay us back all the money, he turned around and ran away. 224 00:14:58,500 --> 00:15:02,648 And the research assistant did not have the heart to chase him. 225 00:15:02,649 --> 00:15:06,296 So what we did was, we had to move to a different village, because after the rumor 226 00:15:06,296 --> 00:15:09,090 about this, came out we couldn't stay in the same village. 227 00:15:09,091 --> 00:15:12,878 And, and we also move to the other approach, the one I described to you in 228 00:15:12,878 --> 00:15:17,410 which, instead of giving people the money upfront, we, gave him money at the end. 229 00:15:17,410 --> 00:15:21,899 Now, this idea of giving people the money upfront versus the end is important, 230 00:15:21,899 --> 00:15:26,767 because it's a question of loss aversion, but it also has another important point. 231 00:15:26,768 --> 00:15:31,580 Think about real bonuses in life. Are they in the gain condition or the loss 232 00:15:31,580 --> 00:15:35,420 aversion condition? If somebody has been getting bonuses for a 233 00:15:35,420 --> 00:15:40,001 few years, in which condition they are? Now they don't have the bonus, so of 234 00:15:40,001 --> 00:15:44,693 course strictly speaking they haven't, they don't have the bonus and have to give 235 00:15:44,693 --> 00:15:49,109 it up, but could it be that they are already buying homes and cars and vacation 236 00:15:49,109 --> 00:15:53,663 and sending their kids to school, under the assumption that they will make this 237 00:15:53,663 --> 00:15:56,404 bonus. And now they're stressed about it to an 238 00:15:56,404 --> 00:16:00,692 even higher degree, because right now, what happen is that people are in this 239 00:16:00,692 --> 00:16:03,340 condition. They think about losing, they think about 240 00:16:03,340 --> 00:16:07,260 not being able to do everything they have committed to, in some sense, and therefore 241 00:16:07,260 --> 00:16:11,923 they are even more stressed. Now as you can imagine, I've talked to 242 00:16:11,923 --> 00:16:14,894 many bankers about this. And most bankers don't like it so much. 243 00:16:14,894 --> 00:16:20,073 Actually when you describe the results, about, people in India, and, students and 244 00:16:20,073 --> 00:16:24,220 so on, they have no problem. But the moment you ask bankers whether if 245 00:16:24,220 --> 00:16:27,473 this could apply to them, their usual answer is, no. 246 00:16:27,474 --> 00:16:29,110 Me? Heaven forbid. 247 00:16:29,110 --> 00:16:33,217 How can it be? Of course it would never affect me. 248 00:16:33,218 --> 00:16:39,183 And, now this, of course is a, goes under the rubric of self-justification. 249 00:16:39,183 --> 00:16:43,542 And we'll come back to it, eh, in a few minutes to talk about whether this would 250 00:16:43,542 --> 00:16:46,704 apply to executives in high positions and so on. 251 00:16:46,705 --> 00:16:51,552 But before we continue with this, one of the things that troubled us, was the fact 252 00:16:51,552 --> 00:16:56,906 that all tasks basically behave the same. In all tasks, performance was going down 253 00:16:56,906 --> 00:17:01,677 for the highest level of pay, and this did not fit our intuition. 254 00:17:01,678 --> 00:17:05,722 Our intuition was that there would be some tasks, particularly the mechanical tasks, 255 00:17:05,722 --> 00:17:08,299 that higher pay would yield higher performance. 256 00:17:08,300 --> 00:17:13,936 For example, what if I paid you to jump? If I paid you a small amount to jump, or a 257 00:17:13,936 --> 00:17:16,712 medium amount to jump, or a very high amount to jump? 258 00:17:16,712 --> 00:17:20,746 Don't you think that you would jump more as the amount of bonus for jumping would 259 00:17:20,746 --> 00:17:22,830 go up? At least that's the intuition. 260 00:17:22,830 --> 00:17:26,526 I mean, by the way, the intuioton is very different for mechanical task than for 261 00:17:26,526 --> 00:17:29,840 mental tasks. Because in mechanical task, you're under 262 00:17:29,840 --> 00:17:34,542 control of your muscles. You can decide how many time to jumps, how 263 00:17:34,542 --> 00:17:38,967 much to try, eh, not to sleep, to stay awake a bit longer and so on. 264 00:17:38,968 --> 00:17:40,770 With mental task it's a bit more difficult. 265 00:17:40,770 --> 00:17:44,614 With mental task it's not the case that you can just close your eyes and say I 266 00:17:44,614 --> 00:17:48,829 want to think more, I want to remember more, I want to do it to a higher degree. 267 00:17:48,830 --> 00:17:52,832 So we thought that there should be a separation between the mechanical tasks 268 00:17:52,832 --> 00:17:55,796 and the mental tasks. But we didn't see it in the first 269 00:17:55,796 --> 00:18:00,766 experiment, but maybe, we thought, it was because our mechanical task was not, were 270 00:18:00,766 --> 00:18:04,064 not just mechanical. Throwing a ball, for example, is not a 271 00:18:04,064 --> 00:18:07,069 simple mechanical task, it involves other things. 272 00:18:07,070 --> 00:18:10,085 So could we make the mechanical task even simpler? 273 00:18:10,085 --> 00:18:12,359 Could we make it less? And we tried that. 274 00:18:12,359 --> 00:18:16,779 We did the simplest mechanical test we could we asked people to put two fingers 275 00:18:16,779 --> 00:18:19,523 on the keyboard and alternating pressing them. 276 00:18:19,523 --> 00:18:24,003 And the faster they alternated the higher the performance, and the slower the lower 277 00:18:24,003 --> 00:18:27,059 the performance. So this was the mechanical test, very, 278 00:18:27,059 --> 00:18:32,145 very simple, no thinking required. The mental task was a task we took from 279 00:18:32,145 --> 00:18:36,875 our experiments on dishonesty. And we gave people a set of 12 numbers, 280 00:18:36,875 --> 00:18:40,570 and we asked them to find two numbers that add to ten. 281 00:18:40,570 --> 00:18:44,216 And we gave people either this one or this one first, and then we flipped it, and 282 00:18:44,216 --> 00:18:48,390 then we gave it to them again. And we did it for different levels of 283 00:18:48,390 --> 00:18:50,668 bonuses. And what happened? 284 00:18:50,668 --> 00:18:56,868 When we talked about the mechanical task, as we gave people a higher bonus, 285 00:18:56,868 --> 00:19:01,182 performance went up. When we did the same thing with the mental 286 00:19:01,182 --> 00:19:05,110 task, as we gave people higher bonuses, performance went down. 287 00:19:05,110 --> 00:19:10,975 So we replicated our previous result for the mental arithmetic task, and we got the 288 00:19:10,975 --> 00:19:16,777 opposite prediction for something that had very, very simple mechanical task. 289 00:19:16,778 --> 00:19:21,670 And this I think suggest, that our intuition about how bonuses would, eh, 290 00:19:21,670 --> 00:19:26,340 drive performance is relying on intuitions about mechanical tasks. 291 00:19:26,340 --> 00:19:31,224 We think about ourselves as engines and muscles and if you just try harder, if we 292 00:19:31,224 --> 00:19:35,295 just got paid more, you would lift more weights or jump more times. 293 00:19:35,295 --> 00:19:40,191 Whereas the mind, tasks that have to do with concentration, thinking, memory and 294 00:19:40,191 --> 00:19:44,727 so on are actually much more complex and you can't will yourself into higher 295 00:19:44,727 --> 00:19:48,880 performance in the same ease. And in fact as you try to will yourself, 296 00:19:48,880 --> 00:19:52,330 into higher performance, things can actually go backward. 297 00:19:52,330 --> 00:19:57,676 And you can ask yourself this question, imagine you go into surgery, it's a very 298 00:19:57,676 --> 00:20:03,022 delicate brain surgery, and just before you go to, eh, your falling asleep, you 299 00:20:03,022 --> 00:20:07,079 meet the surgeon. And you can say thank you very much, 300 00:20:07,079 --> 00:20:10,527 please do your best, or you could give them a bonus. 301 00:20:10,528 --> 00:20:14,333 You could say you know what, if you do well, I'll give you $100,000. 302 00:20:14,333 --> 00:20:18,690 Or maybe you can make, give him a negative bonus, a punish, potential punishment. 303 00:20:18,690 --> 00:20:22,848 You could say you know what, if you don't do well, I hire two hit men to wait for 304 00:20:22,848 --> 00:20:27,534 you outside the back alley and they would, you know, break your knees or something 305 00:20:27,534 --> 00:20:31,280 like that. Is this something that you would want? 306 00:20:31,280 --> 00:20:35,635 Would you want your brain surgeon, as they are operating on you, to think about 307 00:20:35,635 --> 00:20:40,191 either the yachts they could buy with all this money or their knees getting broken 308 00:20:40,191 --> 00:20:43,789 if you don't do a good job? Probably not, in fact there's a lot of 309 00:20:43,789 --> 00:20:46,639 research in what is called a state of flow. 310 00:20:46,640 --> 00:20:52,015 And the idea of a state of flow, is that once you get immersed in a task, you think 311 00:20:52,015 --> 00:20:56,525 about nothing about the task. You're completely absorbed and consumed 312 00:20:56,525 --> 00:20:59,507 and focused on that task, nothing else matters. 313 00:20:59,508 --> 00:21:03,996 And this state of flow is what's driving the highest-quality performance. 314 00:21:03,997 --> 00:21:07,491 Now, from this perspective, it's kind of strange to think about bonuses. 315 00:21:07,492 --> 00:21:10,801 What are bonuses? Bonuses are basically saying, I don't 316 00:21:10,801 --> 00:21:14,705 think you're going to work for me very hard, so what I'm going to do, I don't 317 00:21:14,705 --> 00:21:18,929 think you're motivated, I think you want to do it hard enough, so I'm going to put 318 00:21:18,929 --> 00:21:22,961 a big pile of money on the way and by you thinking about the money all the time, 319 00:21:22,961 --> 00:21:25,859 you're going to work in the way that I expect you to. 320 00:21:27,180 --> 00:21:29,802 What kind of task this is going to be relevant to? 321 00:21:29,802 --> 00:21:33,823 Well if it's laying bricks, or something very, very mechanical, maybe it works. 322 00:21:33,823 --> 00:21:38,107 Are people thinking about the money and that would motivate me to work harder, but 323 00:21:38,107 --> 00:21:42,265 anything else, do you really want part of peoples' minds to be occupied with how 324 00:21:42,265 --> 00:21:46,295 much money they're making and is this the right amount and how much effort? 325 00:21:46,295 --> 00:21:49,962 Or do you want it to be in a state of flow, fully consumed by it? 326 00:21:49,962 --> 00:21:53,862 And if you want a state of flow, maybe bonuses are actually distracting, maybe 327 00:21:53,862 --> 00:21:56,460 take, taking away attention rather than helping. 328 00:21:56,460 --> 00:22:01,413 Maybe they are decreasing motivation, rather than increase motivation.