|Charlie Munger to the left, Warren Buffet to the right.|
Munger's 24-point treatise begins by observing that that there is a dramatic “under-recognition of the power of what psychologists call ‘reinforcement’ and what economists call ‘incentives.’” Munger notes:
Well you can say, ‘Everybody knows that.’ Well I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it. And never a year passes but I get some surprise that pushes my limit a little farther.
Read the whole thing! Munger mentions Skinner 16 times, Pavlov 12, and operant conditioning three times.
Incentives are a double-edged sword, of course. You can incentivize people to do good and you can incentivize them to do evil as well.