Incentive-centered design (ICD) is the science of designing a system or institution according to the alignment of individual and user incentives with the goals of the system. Using incentive-centered design, system designers can observe systematic and predictable tendencies in users in response to motivators to provide or manage incentives to induce a greater amount and more valuable participation. ICD is often considered when designing a system to induce desirable behaviors from users, such as participation and cooperation. It draws from principles in various areas such as
Economics
Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and interac ...
,
Psychology
Psychology is the scientific study of mind and behavior. Its subject matter includes the behavior of humans and nonhumans, both consciousness, conscious and Unconscious mind, unconscious phenomena, and mental processes such as thoughts, feel ...
,
Sociology
Sociology is the scientific study of human society that focuses on society, human social behavior, patterns of Interpersonal ties, social relationships, social interaction, and aspects of culture associated with everyday life. The term sociol ...
,
Design
A design is the concept or proposal for an object, process, or system. The word ''design'' refers to something that is or has been intentionally created by a thinking agent, and is sometimes used to refer to the inherent nature of something ...
, and
Engineering
Engineering is the practice of using natural science, mathematics, and the engineering design process to Problem solving#Engineering, solve problems within technology, increase efficiency and productivity, and improve Systems engineering, s ...
. ICD has been gaining attention in research communities due to the role it can play in helping systems benefit their users and ultimately achieve better results. This is also relevant to the incentive-based frameworks inside
Human-Computer Interaction.
History
In 1996, the
Nobel Prize in Economics
The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (), commonly referred to as the Nobel Prize in Economics(), is an award in the field of economic sciences adminis ...
was awarded to
William Vickrey
William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-American professor of economics and Nobel Laureate. He was a lifelong faculty member at Columbia University. A theorist who worked on public economics and mechanism design, ...
and
James Mirrlees
Sir James Alexander Mirrlees (5 July 1936 – 29 August 2018) was a British economist and winner of the 1996 Nobel Memorial Prize in Economic Sciences. He was knighted in the 1997 Birthday Honours.
Early life and education
Born in Minniga ...
for their work in "The economic theory of incentives under asymmetric information", which was a core issue addressed by the theory of
mechanism design
Mechanism design (sometimes implementation theory or institution design) is a branch of economics and game theory. It studies how to construct rules—called Game form, mechanisms or institutions—that produce good outcomes according to Social ...
. The theory of mechanism design was an antecedent to incentive-centered design, and on October 15, 2007,
Roger Myerson
Roger Bruce Myerson (born March 29, 1951) is an American economist and professor at the University of Chicago. He holds the title of the David L. Pearson Distinguished Service Professor of Global Conflict Studies at The Pearson Institute for the ...
,
Leonid Hurwicz
Leonid Hurwicz (; August 21, 1917 – June 24, 2008) was a Polish–American economist and mathematician, known for his work in game theory and mechanism design. He originated the concept of incentive compatibility, and showed how desired outcom ...
and
Eric Maskin
Eric Stark Maskin (born December 12, 1950) is an American economist and mathematician. He was jointly awarded the 2007 Nobel Memorial Prize in Economic Sciences with Leonid Hurwicz and Roger Myerson "for having laid the foundations of mechanism d ...
received the Nobel Prize in Economics from the
Royal Swedish Academy of Sciences
The Royal Swedish Academy of Sciences () is one of the Swedish Royal Academies, royal academies of Sweden. Founded on 2 June 1739, it is an independent, non-governmental scientific organization that takes special responsibility for promoting nat ...
for their contributions to that theory. Leonid Hurwicz was the founder of the theory of mechanism design, which is a branch in economics that deals with
game theory
Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed ...
. In mechanism design, designers try to satisfy design goals in specific sets of games by setting outcome functions and message space of the game. The idea of designing "mechanisms", or sets of institutional participation rules, in order to achieve the designer's goals for a system, is a core concept for ICD.
In 2001, the STIET program (Socio-Technical Infrastructure for Electronic Transactions) received a grant to fund for doctoral fellowships and a multidisciplinary program for the
University of Michigan
The University of Michigan (U-M, U of M, or Michigan) is a public university, public research university in Ann Arbor, Michigan, United States. Founded in 1817, it is the oldest institution of higher education in the state. The University of Mi ...
. The program aimed to train, research, and outreach to modern information systems through an incentive-centered design approach. The participants in the program composed of doctoral students and also faculty members of the universities. In 2004, Paul Resnick, one of the four faculty members in the STIET research group of Michigan coined the phrase "Incentive-centered Design" to describe the type of work they did. In 2007,
Wayne State University
Wayne State University (WSU) is a public university, public research university in Detroit, Michigan, United States. Founded in 1868, Wayne State consists of 13 schools and colleges offering approximately 375 programs. It is Michigan's third-l ...
joined the University of Michigan to focus the program on Incentive-centered Design, and the STIET program received a five-year renewal grant that allowed for research in incentive-centered design.
From 2010 to 2015, approximately fifty
British
British may refer to:
Peoples, culture, and language
* British people, nationals or natives of the United Kingdom, British Overseas Territories and Crown Dependencies.
* British national identity, the characteristics of British people and culture ...
academics engaged in th
ORCHID project with one of their chief aims being to elaborate the principles of ICD (referred to as "incentive engineering").
Interdisciplinary concepts
Incentive-centered design branches from various areas and can be applied to a multitude of systems and concepts. It is closely related to
user-centered design
User-centered design (UCD) or user-driven development (UDD) is a framework of processes in which usability goals, user characteristics, environment, tasks and workflow of a product, service or brand are given extensive attention at each stag ...
in that it takes user's wants, needs, and limitations during the design process for a product. Additionally, ICD is connected to
human–computer interaction
Human–computer interaction (HCI) is the process through which people operate and engage with computer systems. Research in HCI covers the design and the use of computer technology, which focuses on the interfaces between people (users) and comp ...
since it involves the conjunction of humans and machines and how the two can mend together well. In particular, ICD blends together the goals of the user and the goals of the system so that the user can have a pleasant and valuable experience while using the system, and the system can give the user what they need and ultimately become more aware and responsive to varying needs. ICD also borrows from the Theory of Incentives. Conflicting objectives and decentralized information are two of the main components of the Theory of Incentives. ICD works to understand the objectives of the user and the system and combine and process information so that both parties obtain optimal results.
Information security
Information security
Information security is the practice of protecting information by mitigating information risks. It is part of information risk management. It typically involves preventing or reducing the probability of unauthorized or inappropriate access to data ...
is the concept of protecting information and information systems from unauthorized access and use. Incentive-centered design can assist in bringing into consideration the errors that humans can make when using a system. These errors could potentially lead to weaknesses in the system that can be taken advantage of by attackers. With ICD, a system can guide a user into providing appropriate and adequate information to prevent system weaknesses. A simple example would be the generation of passwords. By providing users tips, motivation and feedback on the passwords that they choose, systems can ensure that user accounts have a significantly decreased chance of getting attacked.
User-generated content
User-generated content
User-generated content (UGC), alternatively known as user-created content (UCC), emerged from the rise of web services which allow a system's User (computing), users to create Content (media), content, such as images, videos, audio, text, testi ...
in simple terms, refers to media content that are created by users that are made publicly available on the internet. Incentives for users to contribute to user-generated content would be receiving recognition for their work, connecting with others, and self-expression. Examples would include users uploading their own videos on the
YouTube
YouTube is an American social media and online video sharing platform owned by Google. YouTube was founded on February 14, 2005, by Steve Chen, Chad Hurley, and Jawed Karim who were three former employees of PayPal. Headquartered in ...
platform, posting reviews on a website, etc. User-generated content has three requirements. One is the publication requirement, and the second is the creative effort requirement - users must add their own original creative effort and value into their work. The final requirement is that the creation is outside of professional routines and practices - most user-generated content is non-professional and have no relation with anything institutional or commercial.
Reputation systems
Everything has a reputation - goods, services, companies, service providers, etc., and by basing on the collection of opinions of other entities on those things, the reputation system uses an algorithm to generate reputation scores for those things.
Reputation system
A reputation system is a program or algorithm that allow users of an online community to rate each other in order to build trust (social sciences), trust through reputation. Some common uses of these systems can be found on E-commerce websites s ...
s are similar to recommendation systems - purchasing decisions of goods and services are influenced by the reputation scores of those goods and services, and goods with high reputation scores will attract more buyers. Examples would include
Amazon
Amazon most often refers to:
* Amazon River, in South America
* Amazon rainforest, a rainforest covering most of the Amazon basin
* Amazon (company), an American multinational technology company
* Amazons, a tribe of female warriors in Greek myth ...
and
eBay
eBay Inc. ( , often stylized as ebay) is an American multinational e-commerce company based in San Jose, California, that allows users to buy or view items via retail sales through online marketplaces and websites in 190 markets worldwide. ...
, where customers who purchase the item are able to rate and review the quality of the product. The cumulative ratings would be displayed for the product, indicating its quality and popularity. A relation to incentive-centered design would be that if sellers on eBay have a high reputation, then other users would be inclined to buy from them or if the item itself has high ratings, users will be more likely to go for that item.
Social computing
Social computing concerns the intertwining of computational systems and social behavior. Social computing entails a high level of community formation, user content creation, and collective action. Peer-to-peer networks, open source communities, and wikis are all examples of forms of social computing. In such areas, incentives are provided in the form of respect and recognition for users who provide high quality content and contributions. As a result of these contributions, the system overall becomes of higher quality.
Recommender systems
Recommender system
A recommender system (RecSys), or a recommendation system (sometimes replacing ''system'' with terms such as ''platform'', ''engine'', or ''algorithm'') and sometimes only called "the algorithm" or "algorithm", is a subclass of information fi ...
s attempt to predict the 'rating' or 'preference' a user would have of a particular item based on either attributes of the item or attributes of the social network related to the user. These recommendation systems can be seen in places such as social networks suggesting new friends, shopping sites recommending related clothing, etc. The Netflix Recommender System is designed to incentivize participation from the user, aligning the systems interests with the users interests. The users want to find content they are interested in, and
Netflix
Netflix is an American subscription video on-demand over-the-top streaming service. The service primarily distributes original and acquired films and television shows from various genres, and it is available internationally in multiple lang ...
wants to be able to provide better recommendations to their users. The star system that Netflix provides allows for the both parties to benefit.
Online auction design
An
online auction
An online auction (also electronic auction, e-auction, virtual auction, or eAuction) is an auction held over the internet and accessed by internet connected devices. Similar to in-person auctions, online auctions come in a variety of types, with ...
is essentially an auction on the internet. Different formats range from descending auctions to sealed-bid auctions. A huge variety of goods and services can be sold in online auctions, and there are hundreds of different websites that are all for online auctions. A well-known example would be eBay, where users on the site can sell their own personal items for others to buy. In relation to incentive-centered design, sites such as eBay allow users to rate the product the purchased. Sellers and goods that have large numbers of high ratings will attract more buyers compared with unreliable sellers and poor quality goods for sale in the auction.
Current research
Current research is being conducted by the University of Michigan and Wayne State University through their STIET program. The program has made significant contributions to the field of incentive-centered design, and a lot of the research involves game theory models, strategic interaction, and rational decision making.
For example, on July 10, 2008, Rahul Sami and Stanko Dimitrov researched bluffing in
prediction market
Prediction markets, also known as betting markets, information markets, decision markets, idea futures or event derivatives, are open markets that enable the prediction of specific outcomes using financial incentives. They are exchange-traded mar ...
s (In the prediction market, participants bet on the outcome of the market).
Another would be in July 2009, Michael Wellman and Patrick Jordan both designed the Ad Auction game, and they both developed the strategies and trading interfaces for the game as well.
In 2010, Robert Reynolds and Leonard Kinniard-Heether worked on to train a
neural network
A neural network is a group of interconnected units called neurons that send signals to one another. Neurons can be either biological cells or signal pathways. While individual neurons are simple, many of them together in a network can perfor ...
controller to play the
video game
A video game or computer game is an electronic game that involves interaction with a user interface or input device (such as a joystick, game controller, controller, computer keyboard, keyboard, or motion sensing device) to generate visual fe ...
Super Mario
(also known as and is a platform game series created by Nintendo starring their mascot, Mario. It is the central series of the greater Mario (franchise), ''Mario'' franchise. At least one ''Super Mario'' game has been released for every ma ...
through the use of the Cultural Algorithm Toolkit system (CAT 3.0).
Practical applications
This section is about the practical/current applications of incentive-centered design. It includes examples and applications of the technique in existing products/systems.
Nike+iPod Sports Kit
This sports kit from Nike (
Nike+iPod
Nike often refers to:
* Nike, Inc., a major American producer of athletic shoes, apparel, and sports equipment
* Nike (mythology), a Greek goddess who personifies victory
Nike may also refer to:
People
* Nike (name), a surname and feminine given ...
) comes with a receiver that attaches to your
iPod
The iPod is a series of portable media players and multi-purpose mobile devices that were designed and marketed by Apple Inc. from 2001 to 2022. The iPod Classic#1st generation, first version was released on November 10, 2001, about mon ...
or
iPhone
The iPhone is a line of smartphones developed and marketed by Apple that run iOS, the company's own mobile operating system. The first-generation iPhone was announced by then–Apple CEO and co-founder Steve Jobs on January 9, 2007, at ...
and a transmitter that is placed in the sole of the shoe. The kit is a running measurement kit – it measures the time of the user's workout, the distance run, the amount of calories burned, speed, etc. The example of user-incentive design in this system is that when users reach milestones in goal-oriented workouts or achieve personal records, there will be pre-recorded audio feedback from famous sports athletes acknowledging the achievement and also congratulating the user.
Ford Hybrid Car
In the 2010 Ford Fusion and Mercury Milan hybrid sedans, the instrumental panels are designed so that the screen shows the cloudy sky and the grass. When drivers are driving in a fuel-efficient manner, then the green leaves that appear on the panels will multiply accordingly. This goal-oriented display could motivate the driver to motor in a more fuel-efficient manner.
Class grading system at Indiana University
Inspired by games such as ''
World of Warcraft
''World of Warcraft'' (''WoW'') is a 2004 massively multiplayer online role-playing (MMORPG) video game developed and published by Blizzard Entertainment for Windows and Mac OS X. Set in the '' Warcraft'' fantasy universe, ''World of War ...
'', professors at
Indiana University
Indiana University (IU) is a state university system, system of Public university, public universities in the U.S. state of Indiana. The system has two core campuses, five regional campuses, and two regional centers under the administration o ...
changed their course grading system so that it appears to be like a quest in a video game. Students will start off with 0 experience points, and class requirements such as homework, class attendance, exams, and projects are turned into "quests", "fighting monsters", "crafting", and "joining a guild". Lee Sheldon, a university course coordinator, found that student interest and performance increased after such change in the college coursework grading system.
Achievements
In
Xbox 360
The Xbox 360 is a home video game console developed by Microsoft. As the successor to the Xbox (console), original Xbox, it is the second console in the Xbox#Consoles, Xbox series. It was officially unveiled on MTV on May 12, 2005, with detail ...
games, players can unlock Xbox achievements throughout the game. Each achievement is different and requires and challenges the user to complete a certain task. While the Xbox 360 was the first to use achievements, other platforms offer a comparable incentive system as well, including trophies on
PlayStation 3
The PlayStation 3 (PS3) is a home video game console developed and marketed by Sony Computer Entertainment (SCE). It is the successor to the PlayStation 2, and both are part of the PlayStation brand of consoles. The PS3 was first released on ...
and achievements on
Steam
Steam is water vapor, often mixed with air or an aerosol of liquid water droplets. This may occur due to evaporation or due to boiling, where heat is applied until water reaches the enthalpy of vaporization. Saturated or superheated steam is inv ...
.
See also
*
Gamification
Gamification is the process of enhancing systems, services, organisations and activities through the integration of game design elements and principles in non-game contexts. The goal is to increase user engagement, motivation, competition and ...
References
{{reflist, 2
Behavioral economics
Mechanism design
Incentives