Analysing your IQ
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People respond to incentives—if you want different behavior, change the incentives.
Incentive Design is a cognitive framework that changes how you see problems. Once you understand it, you'll notice opportunities to apply it everywhere.
Never assume people will act against their incentives. Design systems that align interests.
Incentive Design works by providing a reliable heuristic for a common class of problems. Instead of reinventing decision-making each time, you apply a tested pattern.
Salespeople paid on commission will sell; paid hourly, they may coast.
This model is most useful when you're stuck. If your current approach isn't working, Incentive Design often reveals the hidden constraint.
Over-applying: Not every problem benefits from this model. Match the tool to the situation.
Under-applying: People learn the model but don't practice it. Application takes repetition.
Misunderstanding the principle: Surface-level understanding leads to poor execution. Study the examples.
Ignoring context: The same model works differently in different domains. Adapt accordingly.
Identify a current decision you're facing. Write down the assumptions you're making. Challenge each one.
Look at a past failure. Apply Incentive Design retroactively—would it have changed the outcome?
Teach the model to someone else. If you can't explain it simply, you don't understand it well enough.
Set a reminder to apply this model once per week for the next month. Track the results.
No single model handles every situation. Build a toolkit of complementary frameworks.
Mental models require specific cognitive traits to execute. Do you have the Purpose for this?
People respond to incentives—if you want different behavior, change the incentives.
Never assume people will act against their incentives. Design systems that align interests.
Salespeople paid on commission will sell; paid hourly, they may coast.
Use Incentive Design when facing complex decisions in the strategy domain, when conventional approaches aren't working, or when you need a structured framework for analysis.
Incentive Design is used by strategic thinkers, business leaders, and anyone who needs to make high-stakes decisions under uncertainty. It's particularly popular in investing, startups, and engineering.
Yes. Mental models are learnable skills, not innate talents. The key is deliberate practice—actively applying the model to real decisions, not just reading about it.