Mental Model 5
The Power of Incentives
“Never, ever, think about something else when you should be thinking about the power of incentives.” - Charlie Munger. According to Charlie there are only a few forces more powerful than incentives…
One of the most precious tricks of life is to learn, master and use Incentives as a technique. This technique can be very successfully used on humans, monkeys, dogs and probably even on trees 
. It seems no one is immune to incentives.
So then, we humans are very gullible when this Incentive trick is used on us; and it is used on us everyday.
The best part of it is, when we fall for it, we brag about how we got a deal. That is what makes this work.
Some innocent examples;
“Buy 1 get one free” - Listen, no one gives you free stuff. Definitely not Colgate or D-mart. Get it
“Stay for 3 nights and get 4th free” - Lol. Do I need explain I think you all are now getting this game.
“Sales Incentives” - Bhaag Tiger Bhaag. Target kiya to paisa milega.
“If you finish your homework by 9, I will take you for an ice cream” - Wait, are you mistreating your children now and taking advantage of their innocence? How terrible of you
Not so innocent examples
“Your potential financial advisor sends you a cake on your birthday”. For example, I get more than a dozen cakes, flowers and cards from financial advisors every year. They seem to love me more than my own friends
“Your bank branch manager comes home. Says, you are more like a friend than a customer. You know specially for you I am recommending this FMP fund. I am investing in it myself. This one I am recommending only to a close knit group.” But you are friends now right? We gotta listen to our friends, no?
So are incentives bad? No.
You just hope that incentives are used for good. But for people who understand incentives, they can do much with them. It is a very powerful tool.
Now keep on the lookout for incentives being thrown at you and soon it will become part of your arsenal. It is so much fun when I see people trying to use it on me. I am smiling inside at the novices 
—End for today