Book Review: The Upside of Irrationality

I purchased this book as in flight reading material for a recent business trip on the strength of a single question on the back cover:

"Why can paying high bonuses lead to lower productivity?"

I was also generally interested in the first part of Dan Ariely's book which deals with the unexpected ways in which we defy logic at work.

I found The Upside of Irrationality to be an engaging book that explained a number apparently irrational responses to various situations. The (simplified) answer to the issue of why large bonuses don't always produce better performance, and sometimes produce worse performance, is that the higher the stakes the more likely that the recipient of the bonus will succumb to pressure. Also, when as the stakes get higher, people (understandably) start spending more time thinking about their bonus than focusing on the task at hand. As an aside, I wouldn't have minded more space being devoted to what incentive schemes do tend to produce higher performance. The author does address the point but not in as much detail as he devotes to unsuccessful incentive structures.

While he book reads as a discrete list of issues where irrational human behavior is examined and explained rather than a single cohesive look at the subject, it remained an engaging and thought provoking read.

Recommended (although possibly not for people who's compensation includes a large bonus element).