The Salmon Is Delicious: An Example of Incentives at Work

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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.


Tankle

I love artichoke dip.

rda

so, how *was* the artichoke dip?

Tristan

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?

J

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.

Joe D

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.

DanC

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.

Celeste

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.

Matt

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".

ZachPruckowski

My guess is that it's because the dessert is an immediate incentive, whereas the money might not be something you get until a paycheck and then you have to spend it to get your reward.

Also, if you otherwise only get the dessert after eating a meal at the restaurant, and the restaurant is "reasonably fancy", the cost of "I want that dessert" might well be on the same scale as $100, especially if you're getting taxes taken out of the $100.

Michael F. Martin

Now all she has to figured out is a way to split the dessert with you and she's guaranteed to win.

Cory

It reminds me of simple demand curves. If you have two items plotted, it forms a curved line, as if the marginal utility of one more "A" is less than the marginal utility of a "B" increases - of course until the positions switch as you have less A's and more B's.

I may have a lot of dollars in my pocket, so the perceived marginal utlity of it is not very much, but I will only have 1 dessert. If you said "you can have $100 or 10 desserts," I bet she'd be less enthusiastic for dessert and more for the $100.

Brad

A "healthy portion" of a dessert? Does that mean it is small or large?

Grant

They were definitely pushing salmon (and possibly artichokes) that was about to turn. I try to avoid fish specials at non-seafood restaurants for this reason.

Avi Rappoport

I disagree about a $3,000 bonus vs. bagels once a week: for most working people, that bonus is enough money to really matter.

If it were $300 vs. bagels, and they were the really good traditional NY-style bagels instead of the mushy midwestern-style, that would be different!

carlosmx37

When I worked as a waiter,in order to pay my education,there was not monetary incentive at all.
The order was."push the tuna salad because nobody wants it,and if doesnt sell,then it is what you are gonna eat!"

Since I preferred the steaks,I always convinced the patrons that the "delicious tuna salad" was especially prepared by the cheff for his girlfriends and the owners family.

Kati

That happens in retail stores too. Where I work (a national chain you've probably been to), the management often has contests, and sometimes it is a competition to sell a particular item. The prize is often an item that we sell, although it might be chocolate, a gift card to another store (usually $10), or some other small prize.

The item being promoted is chosen for a variety of reasons. Often it's something the company is pushing, like a new product. It also might be something on sale, which is easy to add on and boost sales. A few times it's been an item on clearance that we'd like to get rid of. (Few of our products have expiration dates, so that's not an issue.)

Lucas S.

Cory, you´re ignoring the relative prices in your analysis, so what you`re saying doesn`t make sense at all.

Specially since trading dollars for desserts is pretty easy...

Justin

Are you sure it wasn't all a big ploy to sell the new dessert?

After hearing the waitress's answer, I might have ordered the artichoke dip, but I definitely would have ordered the dessert.

JJ

waited tables at various points in my life. this is a pretty common practice. what's surprising is that these types of cheap incentive tricks aren't used more often in other business settings.

for example, i work for an econ consulting firm in an office run by a millionaire economist. about once a month or so, he unloads some old possessions of his (usually, random pc/video/audio equipment) by offering it for sale to the office staff for about 10-40% of market value (used price market value). prices range from $5 to $500.

i always thought it'd be infinitely more beneficial to his bottom line (due to increased workplace morale, which is generally low) if he simply gave the items away by employing a raffle for these items rather than selling them. i can't imagine the $20 he makes off the sale of these used items to his staff that make him a million+ annually is more beneficial to him in the long-run.

alternatively, each quarter, he could give the items to people that are #1 for a given performance metric (though, only problem with this is that some of the items only a few people want).

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Sviluppo

"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."

Your opinion of the effectiveness of this approach varies wildly depending on whether you're management or an employee. Management loves such ideas (bagels, birthday cards, cheap toys, certificates, etc.). Employees often smile politely and either throw them away when management isn't looking, or takes them home and throws them away, grumbling about the waste of time and money.

After one birthday celebration, I pointed out that the delay would cause me to have to work late that evening, and if I couldn't get the $2 spent on the card, I really would have preferred to have been left alone to do my job and get it done on time.