Economics and self interest: it's far more complicated than that...

he last 20 years and particularly the' 90s onward, have seen emerging studies, some models, some experiments, some observational field studies, that are showing, A) that people systematically do not behave according to the traditions of selfish rationality under controlled conditions; B) that when you set up systems with different assumptions, you get different behavior, and you get actually better results. There is a beautiful study, for example, from two or three years ago about knowledge workers. Knowledge work is one of the hard things to get precise in contracts. How do you tell somebody, "How creative have you been at 11:00 in the morning?" And so that's a classic place where having precise contracts to precisely monitor what you do and what you don't do becomes very difficult.

They did observational studies, and they built a model and they built observational studies. What happens to knowledge-sharing within teams if on the one hand, you create explicit incentives, monitor the incentives, you share more, you get more; on the other hand, you build much more team spirit and you make it the thing that's the right thing to do as a member of this team and create much more social relations within the team. What they found was ... setting up a social dynamic that's a team dynamic, and what's understood to be the right thing to do achieves much greater internal knowledge flows than setting up an effort to create incentives.

Ht to the Edge.