Incentive vs Bribe

This article talks about situations and judgement calls between incentives and bribes.

What is the difference between a bribe and an incentive ?

Aren’t bribes an incentive as well ?

Without looking at the dictionary, we come at an approximate conclusion that bribes are incentives that steer people away from their original role of work or in a manner that is detrimental to their employer.

In scenarios where there is no employer, bribes are incentives that steer you away from your goal or keep you from executing a certain set of actions that would otherwise be beneficial.

In this system, bribes and positive incentives are spawned off the same thinking mentality, to cause a growth spurt or a change in direction of actions; except one works in a manner that positively benefits the system and other that negatively impacts the system’s workings.

We observe businesses and individuals requesting for discounts from their vendors.

The question is, “Is that discount an incentive or a bribe ?”

Both the business and the individual intend to make an exchange.
Why would the business offer the individual a discount ?

The business offers a discount to acquire a customer,
do they regret offering the discount ?
Often not.

Business’ incentive isn’t just transactional. It carries on post the acquisition of the customer. In other words, the business’ incentive for acquiring the customer through the discount isn’t the money involved in the transaction but some other metric which could be anything; it could be volume, sales trajectory, adoption by scale or quite possibly something else.

The business’ incentive through acquisition of the customer through discounting is their ability to either sell them more stuff down in the future or the satisfaction of an internally measured metric.

The individual views the momentary transaction and finds that they are receiving value greater than what is was earlier valued at.
The individual is hence making a bargain that gives them more leverage to act in their own system.

The business by offering discount is incentivised.
The individual by receiving a discount is incentivised.

This is an example of a win win situation in a discounted pricing model.

The only reason this is a win win situation is because the business is willing to overlook the pricing discount in favour of satisfying another metric in the long run.

To the common man, this model might look flawed since the company is losing money by offering discount, but what they do not notice is that the company’s objective is entirely different in the initial interaction. They (business) meets whatever their (company’s ) internal objective is, which in most cases is the acquisition of a customer rather than turning a profit (for the initial interaction)l.

Both the business and the individual are playing different games.

The individual, in most cases plays the short term gain game and the business plays the long term gain game. Both win in both scenarios.

This is an example of win win situation in discounted pricing model whereas there are hundreds of models that I’m or we as people aren’t aware of, yet.

The world’s economy, I believe prospers because of more of such win win situations. When two parties of a transaction are looking through both ends of the same telescope, it is often hard to fathom anything but another eye, whereas if one is able to profit off the transaction in another manner than the highest priority metric of the other party, a perfectly aligned symbiosis can be formed.

We need more and more such situations where such win win transactions occur.

Bribe:

If at all, the transaction occurs in a manner that benefits a local scope but harms the working at a larger scope, the very same incentive can be considered a bribe.

Situation:
A copper accepts an incentive that would benefit their immediate system from a party that intends to harm the copper’s employer, the government.

The copper either slacks off on his work or does what’s equivalent of a corporate espionage; this affects not just his employer, the government but also people in the immediate vicinity due to his alignment with a hostile party.

In this situation, while both are incentivised, one happens to be a bribe since it evicts actions that is detrimental to one of systems involving the affected party. Situations as such must be actively avoided.

In other scenarios: Habits

This kind of mentality, can also have effects on a personal level where there is no two parties involved. Positive habit formation are supposed to be incentives to better one’s life. Anything that affects your life detrimentally are bribes.

Takeaway:

With this new perspective in mind, if there is one thing that you may retain from this article, let it be one among the following:

• Actively avoid bribes
• Embrace positive incentives
• Use perspectives to change incentives or evaluate bribes in scopes

I hope this article has been helpful.

This article is a result of a lunch conversation between me and my sister on 26–09–2018.

The conversation began with “Should we incentivize chefs for making better food in a standardised industry ?”

The context from the contents of this article, I believe would be most helpful to the public compared to other parts of our conversation.

Thank you.