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Why Your Startup Lost Its Culture: Social Norms vs Market Norms | Predictably Irrational Ep. 4

*Your company's paying you more than ever. So why does everyone seem less motivated?*

In this episode of Book Takeaways for Professional Growth, host Marcus breaks down *Dan Ariely's* groundbreaking research on **social norms versus market norms**—and why mixing these two motivational systems is one of the deadliest mistakes a leader can make.

The Pattern You Haven't Recognized:

When your startup scaled from 20 to 150 people and introduced performance bonuses, something died. The collaboration evaporated. People stopped helping each other. The culture you loved disappeared.

*This isn't about the money.* It's about which motivational system you activated. And *Dan Ariely's Predictably Irrational* research proves once you introduce market norms into a social context, the social motivation nearly disappears—permanently.

What You'll Learn:

✅ *The Two Motivational Systems* - Why helping a friend move feels different than getting paid to move boxes
✅ *The Volunteer Experiment* - 168 circles vs 159 circles vs 101 circles—how payment destroyed motivation
✅ *The Daycare Fine Study* - Why introducing a $10 late fee made the problem worse (and removing it didn't fix it)
✅ *The Culture Decay Pattern* - The three phases of how scaling companies accidentally kill social norms
✅ *Leader Framework* - How to choose your motivational system and protect it

The Research-Backed Truth About Social Norms Versus Market Norms:

*Dan Ariely's* experiments in *Predictably Irrational* reveal a shocking truth: People working for free (social norms) often outperform people getting paid (market norms).

In his circle-dragging experiment, volunteers asked to "help with research" dragged 168 circles. Volunteers paid $5 only dragged 159 circles. And volunteers paid 50 cents? Just 101 circles. The introduction of money switched their mental frame from contribution to transaction—and performance dropped.

The daycare study proves it's permanent: After introducing then removing fines for late pickup, parents never returned to feeling guilty. Once you activate market norms, you can't go back.

Why This Matters for Your Career:

*Social norms versus market norms* explains why:
Your once-passionate team became cynical after implementing individual bonuses
Startups with modest pay often outperform corporations with huge salaries
That performance bonus program made people work less, not more
You can't call your team a "family" while implementing stack rankings

*Dan Ariely's* conclusion: "Money is the most expensive way to motivate people. Social norms are not only cheaper, but often more effective."

Your Action Point:

Assess your current team: Is it operating in social norms or market norms? Look for signals—do people help each other freely or guard their work? Do conversations focus on mission or metrics?

Once you understand which system is active, you can navigate strategically.

*TIMESTAMPS:*
0:00 - Cold Open: The Culture That Died
2:15 - Two Worlds, Two Rules
5:00 - The Volunteer Experiment
8:30 - The Daycare Fine Study
11:00 - How This Killed Your Culture
15:15 - Your Action Point

This is Episode 4 of our series on **Predictably Irrational by Dan Ariely**.

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