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Extrinsic incentive error is a cognitive bias where people tend to overestimate the influence of extrinsic incentives (such as money or rewards) on others' behaviors, while undervaluing intrinsic motivations (like personal satisfaction or enjoyment). It can lead to a misunderstanding of why people perform certain actions or participate in activities.
This bias occurs because individuals often project their own motivations onto others. When we consider our motivations, we are aware of the internal, intrinsic factors that drive us. However, when interpreting other people's actions, we lack insight into their internal states and therefore resort to visible, extrinsic explanations.
Misjudging the motivations of others can lead to ineffective incentives and policies, reduced morale, and missed opportunities to engage individuals in meaningful ways. Overreliance on extrinsic incentives might overshadow or diminish intrinsic motivations, ultimately affecting performance and satisfaction.
To counteract this bias, one can gather more qualitative data about what actually motivates different individuals through discussion and feedback. Encouraging open communication and fostering an environment where intrinsic motivations are recognized and supported can also help balance the tendency to overemphasize extrinsic incentives.
Some critics argue that the bias oversimplifies the complex nature of motivation by categorizing it strictly into extrinsic and intrinsic types, ignoring context and personal nuances that can influence behavior.
On the Social Psychology of Agency Relationships: Lay Theories of Motivation Overemphasize Extrinsic Incentives
Heath, C. (1999)
Organizational Behavior and Human Decision Processes, 78(1), 25-62
A Meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation
Deci, E. L., Koestner, R., & Ryan, R. M. (1999)
Psychological Bulletin, 125(6), 627-668