A Nobel Prize winner and a leading behavioral economist offer common sense and counterintuitive insights on performance, collaboration, and innovation.

Read the full article at: www.mckinsey.com

Remember the trick your parents used on you or the one you might use on two kids when they are fighting about how to fairly share a cookie? You know, the trick where one kid gets to cut the cookie, but the other gets first choice of the pieces?

Turns out the old cookie trick (actually more wise than tricky) is a ”well-known mechanism…the ‘divide and choose’ procedure” in “mechanism design,” one of several economic concepts discussed in this plain-spoken McKinsey Quarterly interview.   And the other concepts are as interesting.

Eric Maskin, Nobel laureate in economics, explains, “mechanism design recognizes the fact that there’s often a tension between what is good for the individual, that is, an individual’s objectives, and what is good for society—society’s objectives. And the point of mechanism design is to modify or create institutions that help bring those conflicting objectives into line…”

Eyal Winter, Silverzweig Professor of Economics at the Hebrew University of Jerusalem, adds, “The balance between competition and cooperation is something that CEOs and managers have to think deeply about, by opting for the right mechanism.”

As a leader, designing the right mechanism – for incentives and bonuses, say – could help minimize conflicts and improve performance. This isn’t just kids’ stuff.

Contact us and we can work with you to consider and design various ways to improve your employees’ performance and morale.