In his own words
Munger on Incentives
13 sourced quotes. All themes
“Show me the incentive and I will show you the outcome.”
“Never, ever, think about something else when you should be thinking about the power of incentives.”
“Perhaps the most important rule in management is, 'Get the incentives right.'”
From the FedEx night-shift example in the Misjudgment essay; wording varies slightly across editions.
“Well I think I've been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I've underestimated it. And never a year passes, but I get some surprise that pushes my limit a little farther.”
First given as a 1995 talk; the canonical wording is the expanded Almanack version.
“We want to win the bass fishing tour, whereas pension fund consultants sell tackle. We're not interested in selling tackle, we're interested in catching bass.”
His doers-vs-sellers point (he framed it as 'Warren and I').
“I have avoided all my life compensation consultants. I hardly can find the words to express my contempt.”
“The people who design easily gameable systems belong in the lowest circle of hell.”
“The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor.”
Via Griffin's book; the occasion isn't pinned to a transcript.
“I asked him, 'My God, they're purple and green. Do fish really take these lures?' And he said, 'Mister, I don't sell to fish.'”
A fishing-tackle joke he retold; the punchline is the salesman's, on incentives.
“Finally, somebody got the idea to pay all these people not so much an hour, but so much a shift — and when it's all done, they can all go home. Well, their problems cleared up overnight.”
His Federal Express night-sort example — pay by the shift, not the hour.
“In a bureaucracy, you think the work is done when it goes out of your in-basket into somebody else's in-basket. But, of course, it isn't. It's not done until AT&T delivers what it's supposed to deliver.”
“It's what I call fee-driven buying, much of it, where people are buying things to get the fees.”
On the private-equity / venture-capital fee culture.
“Unfortunately, Reason-Respecting Tendency is so strong that even a person's giving of meaningless or incorrect reasons will increase compliance with his orders and requests.”
His Reason-Respecting Tendency — even meaningless reasons increase compliance.