Incentives and Human Behavior

After this phone conversation, I can only assume that the managers at the local paper must have been given a mandate: increase revenue in classified ads. Too bad they didn’t inform paying customers how they were going to do that. Consider the following true conversation:

Classified Ad Saleswoman: “O.k., so what do you want your ad to say?”

Customer: “1997 Volvo Sedan 4D, pw, pl, ps, air, CD, 35,400 miles. One owner, great condition. $5500 OBO. 555-5555 anytime”

Saleswoman: “O.k. that sounds good. Umm…do want to keep the ‘OBO’?”

Customer: “Uh yeah…(thinking)…why do you ask?”

Saleswoman: “Well we don’t abbreviate OBO anymore.”

Customer: “Well, o.k…just out of curiosity, why?”

Saleswoman: “Well….OBO could be misconstrued as meaning something else. We just don’t want anyone confused by what OBO means. So we are now asking our customers to spell out “or best offer.”

Customer: (thinking something fishy) “Hmm. O.k. I understand. Do we need to spell out other abbreviations, like cyl., auto, 4D, pb, pw, ps, CD, AM/FM or things like that?”

Saleswoman: “Oh no, everyone knows what those mean. It’s just OBO that causes confusion. Everyone knows that auto means “automatic transmission”.

Customer: “Oh, it doesn’t mean ‘automobile’? Are you sure there isn’t some other reason why we can’t use OBO?”

Saleswoman: (Laughs nervously) “Uh, well no. I mean, it’s just to make sure nobody is confused. It’s for our customers benefit.”

Customer: “Well, I’ll tell you what. It sounds like OBO can be confusing. How about I just save some money and keep it out. Sound good to you?”

Saleswoman: “Uh, are you sure? We can spell it out for you just to be safe?”

Customer: “No most people negotiate anyway. I’ll work it out with the buyer. Thanks anyway though”

Increasing revenue may be the goal, but the means to do that is not by coercing people to buy more words under false pretenses. This leads to distrust by your customer. An incentive must be put in place to get people to buy more words. In this case, people now have an incentive to NOT buy more words. This is why abbreviations were made in the first place. As cars acquired more features, i.e., standards of living increased, people needed to fully describe the vehicle they were selling. This of course became expensive for classified ad buyers, takes up precious commerical ad space on the paper and in general requires more print materials and space. Abbreviations are cost saving measures for both the printer and customer. To all of you managers out there, this is called progress through improvements.

A great book about incentives, progress and human behavior is Freedomnomics, a well written rebuttal of the book Freakonomics. To get “the other side of the story”, check it out.

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