One area in which I’ve done research is on the effects of incentives for increasing participation in surveys. We estimate the effects to be a few percentage points in participation. This is a classical example of an incentive: you pay people and they’re more likely to do something.

Joseph and Sam,

To me that just sounds like circular reasoning. All behavior is then rational and incentive-driven, in which case the concepts of rationality and incentives have been drained of all meaning.

Umm, here’s the definition of incentive from dictionary.com: “something that incites or tends to incite to action or greater effort, as a reward offered for increased productivity.” I think there has to be some “something,” not just a warm feeling. For example, when people talk about giving incentives to kids to get better grades, they’re talking about money, or gas in their cars, or whatever, not just that warm feeling.

To get back to the original blog entry, I can’t stop you from saying that rationality is “simply that people respond to incentives.” To me, though, that simply removes much of what is distinctive about rational thinking, and much of what is distinctive about incentives, and makes these into empty universal concepts that describe all behavior.

…you certainly have an incentive. Maybe you mean something else by incentive, but you should state what you mean if that’s the case.

Andrew and Joseph, what experiential differences do you expect to see based on your disagreement?

Cut out the word ‘incentive’ and tell us (without any synonyms like ‘motive’) what you mean by it, and then see if you still disagree.

Do I win a prize?

I’m assuming something like the following as the meaning of incentive: In economics, an incentive is any factor (financial or non-financial) that provides a motive for a particular course of action, or counts as a reason for preferring one choice to the alternatives.

In which case, you certainly have an incentive. Maybe you mean something else by incentive, but you should state what you mean if that’s the case.

When you say, “It is possible to rational just because you feel like it, not because of any incentives.”, I’d ask, why do you feel like being rational? There’s your incentive.

Yes, “incentive” is different from “goal.” I can have a goal of finishing the crossword puzzle with no incentive. Or, to put it another way, some of the things I do have incentives and some do not. Or, to put it even another way, some of the things I do have bigger incentives than others. My effort, and even the extent to which I behave rationally, is not always related to the incentive (if any).

I agree that incentives often help; I just don’t think they’re always there.

Because I believe people are somewhat (“absolutely”-but-fallibly, rather than “relatively”, in your parlance) rational, I can predict my bicycle will probably sell well at $450 but not at $550. If I make get lots of cool ads, maybe I can get people to buy it at $600, but the ads had better be awfully cool. People will probably not buy it for $50,000.

Would you be able to duplicate this basic finding in your notion of “relative rationality”? (That is, not just the notion that more people will buy at $5 than would buy at $50,000, but also that there will be a sharp discontinuity around $500 or so?) If so, what’s an example where absolute rationality and relative rationality would produce different predictions?

(1) You can be doing something (a) as a response to an incentive or (b) without an incentive.

(2) You can act (a) rationally or (b) irrationally.

You can have all four possibilities, I think: 1a/2a, 1a/2b, 1b/2a, 1b/2b.

http://en.wikipedia.org/wiki/Satisficing