NancyLebovitz comments on Open thread, July 29-August 4, 2013 - Less Wrong
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Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management has a fair amount about the limits of incentive plans.
From memory: incentives can work for work that's well-defined and can be done by one person. Otherwise, the result is people gaming the system and not cooperating with each other.
I don't remember whether the book covered something I heard about in the 70s or 80s about a car company which had incentives for teams assembling cars rather than an assembly line.
I was told about a shop owned by partners which had an incentive system for bringing in sales for the shifts the partners worked. The result was that the partners wouldn't tell customers to come back if it might be on someone else's shift.