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Incentives & Mechanism Design

3 mental models

How structures shape behavior and outcomes

Mental Models

Incentive Alignment & System Design

beginner level

beginner

Policy resistance comes from bounded rationality when goals of subsystems differ from system goals. In policy-resistant systems, actors drag system where nobody wants. Align goals of subsystem with goals of the whole. Create good systems making it easy to do right thing—if it's easy to cheat, even good people will.

design
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Game Theory & Strategic Interaction

beginner level

beginner

Tit-for-tat cooperation was optimal game theory strategy for maximizing outcomes. Open with kindness; if the other player responds kindly, continue positive feedback. If negative response, mirror that as well. This blends tough and fair with optimistic tilt. It succeeds because it's nice, retaliatory, forgiving, and clear.

interaction
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Rules & System Leverage

beginner level

beginner

Rules are incentives, punishments, and constraints. When we restructure rules, we change the system. How would learning differ if the class got graded as collective versus individual? Rules are why lobbying exists—they're high-leverage intervention points. Pay attention to rules and who has power over those rules.

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About This Domain

How structures shape behavior and outcomes This collection of mental models provides frameworks for understanding and working within this domain effectively.

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