The Serengeti Equilibrium
In Malaysia, an ATM machine will charge RM 1 from a non bank cardholder should they withdraw; granted that RM1 is a relatively cheap price to pay, we find ourselves scouting for our respective bank’s ATM machine. From a time where we could withdraw from any ATM machine for free, this tiny amount of money seems to have changed behaviour. If everyone, in response to this policy, chooses to do business with the bank which has the most amount of ATM machine in a particular area, the said bank would inevitably gain an upper hand. Convenience became the advantage of a company because of RM 1.
This is the power of incentives. Through its subtle policy changes, it could manipulate behaviour into conformity. Incentives could be the wages that we earn, the tax deductions that we get from the federal government, the cheaper petrol price we pay to fuel our tanks, etc. Incentives could also exist indirectly in the culture of our upbringing, the dictation of what is accepted and what is not, the subtle influence of governmental policies and so on. Incentives, therefore, is the single most powerful driving force that affects our every day decisions.
At a macro scale, the government determines the path of a nation, and then designs a policy package that contains incentives that motivates its people towards goal congruence. What happens if it is not well thought out?
