A group of us went out for dinner the other night at a reasonably fancy restaurant. As we looked over the menu, the waitress was kind enough to let us know that the salmon was particularly delicious. We might also want to try the artichoke dip, she told us. It was her personal favorite.
Alas, our preferences were not easily swayed. None of us ordered the salmon, and there was little apparent interest in the artichoke dip. As she collected the menus, she inquired once again as to whether we might not want to give the artichoke dip a chance. Half-joking, one of us asked her if there was a particular reason why she wanted us to try the artichoke dip.
No doubt sensing that she was talking to a bunch of nerdy economists who would appreciate the truth, she answered honestly: the chef had created a new dessert (and she loves dessert). Whichever member of the wait staff sold the greatest number of artichoke dips and salmon entrees that night would collect a healthy portion of the new dessert for free as a reward. We rewarded the restaurant’s creative approach to incentives by adding an artichoke dip to our order.
Later in the meal, I asked her whether the restaurant incentivized the wait staff to sell particular products frequently. She mentioned that on an earlier occasion, they had offered a $100 prize to the person who sold the most of some item (I forget now what it was).
“Wow,” I said. “That $100 must have really lit a fire under you.”
“Actually,” she replied, “I’m more excited about the dessert.”
Chalk up another victory for non-pecuniary incentives.
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I love artichoke dip.
so, how *was* the artichoke dip?
Was the dip good? Or was she so interested in getting that dessert that she would have told you that “the Play-Dough dip is delicious” to improve her chances?
Non-pecuniary incentives are extremely effective. Let’s say you want to buy yourself some more employee loyalty. You can add $3000 to every employee’s salary, or you can bring in free bagels once a week. Guess which costs more. Now guess which makes your employees feel more appreciated.
The dessert might be more of an incentive because she feels she has a better chance of obtaining it. Everyone is in competition for the $100, but only those who *really* want that dessert are going to flog the specials hard enough to win.
It could imply that her after tax yield on $100 is a more distant reward then the immediate benefit of the desert.
Or she may correctly perceive that her boss is much happier when he pays her in dessert then cash.
I had a friend who waited tables in college, so when I ate there, I always asked what that night’s incentive was. Usually it was a $25-$50 reward to who ever sold the most desserts or the most orders of a new menu item.
The real questions is why they (management) were trying to do this. Perhaps the dip and salmon were closest to going bad (and thus generating no revenue). Sounds “fishy”.