What it is
The extrinsic incentive bias is the tendency to overestimate others’ motivations as being attributed to extrinsic incentives while underestimating the value of intrinsic ones.
Why it happens
There is no consensus on the mechanisms involved, but it’s possible that the extrinsic incentive bias is a product of our tendency to enhance our own self-image relative to others. By assuming others are motivated by money, while we’re in it for the personal reward, we in turn view ourselves as more noble.
Additionally, attributing behavior to extrinsic rewards is sometimes a more coherent explanation. As sense-making creatures, we are drawn to the conclusions that are simple and explanatory rather than complex and riddled with uncertainty.
Example 1 – CitiBank managers
CitiBank managers were asked about what they thought their employees valued. The managers disproportionately believed they valued extrinsic rewards such as money, while underplaying the value of intrinsic rewards that the employees themselves expressed they valued.
Example 2 – Executives think they’re different
Anecdotal evidence from the executive coach David Facer points out the distinction between executive’s beliefs about the primary incentives of their employees versus their own primary incentives. While their employees are thought to be driven by salary and bonuses, the executives see themselves as driven by intrinsic rewards such as solving challenges.
How to avoid it
It is important to empathize with others’ motivations and to realize that we may not be as unique as we often think we are. If we’re driven by intrinsic incentives such as intellectual stimulation, it’s likely the case that many of our like-minded peers are as well. Conversely, if we believe our peers are motivated by money, we shouldn’t be so quick to discredit the same motive applying to our own behavior.