Enable then nudge


If you reduce the transaction cost in the system but don’t see a follow-through behavior of reducing the batch size, consider ways of, even artificially, increasing the holding cost in order to incentivize that batch size reduction.

A bigger point here is that you can change the incentives in the system, but the change in behavior will be lagging, and it needs a nudge in the wanted direction. The reason is that people created implicit rules that govern the behavior based on the previous set of incentives.

You need to change the incentive structure, but also uncover and change the implicit rules that govern the existing behavior in order to nudge the system forward.