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Hey everyone, it's Adam Graham. Welcome back to Rethinking, my podcast on the science of what makes us take.

I'm an organizational psychologist and I'm taking you inside the minds of fascinating people to explore new thoughts and new ways of thinking.

My guest today is Erie Ganesi. He's a leading behavioral economist and his clever experiments are all over Freakonomics.

His new book, Mixed Signals, explains how incentives really work. Why do we take certain actions and sometimes choose not to act at all?

And how do we make sure that rewards don't backfire?

So I'd love to start by asking you how you got interested in incentives.

And I know that one of the defining moments in your career happened at a daycare.

Right. As a behavioral scientist, behavioral economist, I like to start my research, start my thinking by looking at the world, looking at things that happened to me.

The stuff you mentioned about the daycare happened in the late 90s. The daycare where my daughters were, the teacher always told us to be on time.

And they remembered that once we were at lunch in Tel Aviv, we were running late.

I drove like crazy because you need to be there by 4pm to pick up your girls. That's what a good person does.

And then the principal came up with an interesting incentive. She gave a fine of 10 shekels which was about $3 at the time for parents that came late more than 10 minutes.

Again, we were in Tel Aviv again lunch, again surprisingly there was traffic. This time I didn't drive like crazy because I'm not going to risk my life for $3.

That's where I started to think about how negative incentives could actually be crowding out my motivation.

And we ran an experiment based on this, a field experiment with some control takers. I wasn't the only one.

So other people also were also more likely to show up late when we introduced the fines.

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