In some cases, other disciplines showed more interest in psychological

tendencies than did psychology, at least as explicated in psychology textbooks.

For instance, economists, speaking from the employer’s point of view, have long

had a name for the natural results of incentive-caused bias: “agency cost.” As

the name implies, the economists have typically known that, just as grain is

always lost to rats, employers always lose to employees who improperly think of

themselves first. Employer- installed antidotes include tough internal audit

systems and severe public punishment for identified miscreants, as well as

misbehavior-preventing routines and such machines as cash registers. From the

employee’s point of view, incentive-caused bias quite naturally causes opposing

abuse from the employer: the sweatshop, the unsafe work place, etc. And these

bad results for employees have antidotes not only in pressure from unions but

also in government action, such as wage and hour laws, work-place-safety rules,

measures fostering unionization, and workers’ compensation systems. Given the

opposing psychology-induced strains that naturally occur in employment because

of incentive-caused bias on both sides of the relationship, it is no wonder the

Chinese are so much into Yin and Yang.

 

The inevitable ubiquity of incentive-caused bias has vast, generalized

consequences. For instance, a sales force living only on commissions will be

much harder to keep moral than one under less pressure from the compensation

arrangement. On the other hand, a purely commissioned sales force may well be

more efficient per dollar spent. Therefore, difficult decisions involving

trade-offs are common in creating compensation arrangements in the sales

function.