Incentives are wrong – Day 97/139

The world is run by incentives. If you want to understand the behavior of an individual or an organization you should look at their incentives.

Let’s look at the incentives of lost property offices in Finland

1. If a person loses an item and somehow finds out the office where the object was taken, they are first charged 1,70 €/minute to call to confirm the object is there. If the item is found, you will pay the finder’s fee (10 % of the item’s value, up to 20 €). Other fees like storage fees may still apply (up to another 10 % of the item’s value). It is in the interest of the person to pay these fees probably up to about 75 % of the item’s current value if the other alternative is to buy a new item altogether. So they’re happy to pay. But the office only takes up to 20 % of the items value, so it’s a real bargain.
2. If no one comes to collect an item that was delivered to the lost property office, they will auction it off. At the auction the office will get 100 % of the item’s current resale value.

What would you do?

Lets assume you are running a business where you have a fivefold incentive in not finding the owner of an item you have in storage. Would you try to find the owner knowing that even if you find him/her, you only lose money.

Can the incentives be changed?

Most people agree that it would be nice if you could get your stuff back without having to pay anything. The problem is that losing something happens so seldom that no one really has any incentive to do anything about it.

The incentives change automatically after enough people can agree that they are wrong. In our case that equals to the number of people who like FinderBase better.